2. Separating creates profound The possibility of divorce should be battles. Approaching issues with owned by, the other person. The cost, to the spouse. Interest and divi-
anguish and uncertainty, yet at anticipated when there are severe revenge in mind will inevitably inflict rights afforded to common-law and dends are taxable in the recipient’s
the same time each partner has problems in a marriage. Both parties needless anger, pain and guilt not same sex couples are expanding. hands. But if the wife sells the fund
to make important financial de- need to involve themselves in the only on the separating spouses, but Your lawyer will be able to explain before the divorce is finalized and
cisions about spousal and child family finances well in advance of on any children involved. your position to you. triggers the capital gain, the husband
support, joint bank accounts, separation by becoming aware of the Counselling for anger management Upon separation, we can help you must report and pay tax on that gain
real costs of running the family and to help heal painful emotional review and revise beneficiaries for unless both jointly agreed, in writing,
pensions, retirement savings
home, the overall financial situation, damage from the divorce may well registered investments, insurance, that she would have the liability.
plans, the house, the car, the
outstanding debts, and current benefit both parties and may also pension, and your will. Do not wait After divorce, the husband would no
kids... where do you start?
assets. This information should be help children through the trauma until the formal divorce decree. In longer be responsible for the capital
A trusted financial advisor who documented, as it may become diffi- of this life-changing event with less many provinces, any estate share list- gains tax—but tax implications still
knows your circumstances, will cult to obtain after separation occurs. damage. Minimizing the damage ed in a will to a former spouse is need to be considered. An asset with
be able to clarify information Men and women who anticipate you do to each other now will make considered null and void on divorce. an inherent tax liability is worth less
about your current financial divorce should also be aware of it more likely you’ll be able to deal But if your death should occur prior in reality than an asset of similar
situation and can help realign the potential financial implications civilly with each other in the future. to a finalized divorce, the provisions value with no tax liability. Cottages,
your retirement and savings of splitting assets and covering in an unrevised will remain applica- RRSPs and other investments may
When it comes to the business
goals based on your new set future spousal and child support Working Out the Finances ble: if you had willed everything to be split up, but will a spouse receive
payments. These responsibilities your spouse, that’s how the estate the asset with or without tax liability? of dividing assets, you need
of circumstances. Two sets of legal rights related to
may continue for a number of years. will be dispersed. If a registered asset is split, there will to recognize assets cannot be
Frequently, one member of finances arise on the breakdown of
In addition, there will be both initial be an underlying tax obligation down swapped on a dollar-for-dollar
the couple is not as aware a relationship: rights to division of
and ongoing costs for separate Spousal and Child Support the road; a $30,000 car is not a direct basis. A $30,000 RRSP with
of house-hold finances and property acquired during the mar-
living arrangements. trade for a $30,000 RRSP, because its deferred tax liability, for
riage, and rights regarding support. You will likely need a separation
arrangements as the other. the car represents simple cash value example, is worth less than a
Both parties should also be aware of You may be required by your provin- agreement to cover the period prior
He or she will need to have a and the RRSP will be taxed. $30,000 vehicle. Recreational
the potential financial cost of destruc- cial laws to make what’s called an to the formal divorce, then a divorce
clear picture of their economic properties and other assets
tive anger and resentment that “equalization payment” upon disso- agreement. You can incorporate both Separating couples, even those with
situation and projected needs almost always follows a divorce. If lution of a relationship (or you may spousal and child support in the seemingly modest assets, would be with deferred capital gains
while moving through the the separating partners can manage be entitled to receive one). separation agreement, and carry it wise to employ tax accountants who should also not be viewed
process of splitting assets to stay level-headed, the process of forward into the divorce settlement. can review separation and divorce at face value.
Partners in common-law relation-
and arranging for spousal dividing assets will be easier and less Support payments may have tax agreements to see if any issues have
ships may be able to make claims
or child support. likely to result in lengthy court implications. Ask your lawyer for been missed.
against assets in the name of, or
clarification. It is seldom advisable to attempt
The provinces have developed child reaching settlements without expert
Independent advice is critical in dealing support guidelines that apply during advice. Even if both parties are dealing ment, and desires for revenge are
with the immensity of issues arising separation agreements, and federal amicably, the lawyer, accountant, and extremely expensive and highly
from separation and divorce. If you had legislation deals with child support financial advisor all offer unique destructive. Would you rather incur
good working relationships as a couple on divorce. Each spouse should have knowledge that can help ensure the high legal costs or pay for your son’s
with various advisors, you may have a lawyer. On divorce, a judge may divorce agreement works out to maxi- university education?
little choice but to begin working with review the support terms, and may mum benefit and minimum incon-
different professionals. revise them. venience for both parties. The cost in Working Through
fees could be far less than potential the Emotions
Tax Implications costs in taxes or legal stitches dropped Anger, hurt, grief, denial—they’ll all
In a separation agreement, tax issues that have future implications. come flooding in just when you’re
should be taken into consideration Cases where divorces do incur high trying to re-build your life and
with regard to the splitting of assets. legal fees are almost always directly ensure your children survive with
For example, a husband may wish to correlated to the level of rancour as little pain as possible. For some
transfer a $10,000 mutual fund, at between the parties. Anger, resent- couples splitting up, focussing on
