Money matters and separation

On By BarryIn After Separation, Before Separation, During Separation, financial, legal

Note: The following was written a few years ago and as such resources may be difficult to find; however, the subject matter/issues remain. Use the different sections to find more recent articles. The legal section also include information re: financial obligations.

Reality Check!

Two homes cost more than one home! Family income is unlikely to change in the short or medium future. The initial weeks and months are likely even more expensive and may lead to rising debt levels for most separating families. A lack of civil discourse or cooperation may delay the urgent need to change financial habits.

Another common characteristic for many couple breakdowns is overspending in the months leading up to the actual separation. Money issues in the intact family are a leading cause for a relationship to end.

Listed below are a number of topics and resources intended to spotlight the different financial concerns  confronting almost every parent and their family.

Financial woes often contribute to marriage breakdown. Statistics suggest many couples begin family life in debt. Life with children is expensive and debt and managing debt is often an ongoing concern and a cause for conflict. It is unsurprising that in separating, conflict over money is a continuing saga.

    Before separation points to consider

    Separation with children and two homes triggers for many separated couples a journey  from manageable debt to ever-increasing and often unmanageable day to day debt. Most middle and upper, middle class, intact families spend to the limit of their joint income. Most during their child rearing years were content with savings only in some form of pension and hopefully an increasing asset in their home.

    These main assets are often tied up or unavailable for some time during the separating, legal process. Reading and understanding the legal impact on the financial side of separating is important for both parties.

    Some articles to consider before and during separation

    1. Top 6 marriage-killing Money Issues (Investopedia)
    2. 5 Ways Your Partner Can Ruin Your Credit (Forbes)
    3. Getting divorced? Five steps to get your finances back on track. (Globe and Mail)
    4. What financial experts wish you knew about divorce (Globe and Mail)

    Late in life separations

    Late in life separations are more common today. A well-planned for retirement can be turned upside down when one or both parties choose to end the marriage. Often children are no longer at home; but may or may not be launched into work life. Adult children may turn for financial support at a time when parents feel guilty about their late in life separation.

    Many 50+ age separating parents still have children in expensive post-secondary education and graduate programs. In the middle of a previously, certain trajectory of financial support an unexpected wrench is thrown into the mix. For many couples the assets are again a pension plan and home equity. The home based equity has often been eroded by borrowing from the asset to pay off borrowing in the intact family.

    In many cases only one parent has a full pension plan and the equity in the home may vary widely. Many parents find their long-term financial plans must begin anew. Separations rarely time the market or housing at peak valuation. Women, depending on their circumstances, may find themselves with fewer resources; more specifically some may need to acquire the skill set to manage their own financial affairs. In addition one of the partners may enter a separation unaware of their financial position.

    Resources on later in life separations

    1. Rising ‘grey divorce’ rates create financial havoc for seniors. (Globe and Mail)
    2. What to do when a midlife divorce derails retirement planning (Globe and Mail)
    3. From down payments to tuition, later-in-life divorces affecting plans to support adult children (Globe and Mail)
    4. I’ve seen people cleaned out: Divorce later in life (Financial Post)
    5. A divorce behind him and no company pension (National Post)
    6. Downsized: How a late-career job loss can derail retirement plans (Globe and Mail)

    The Legal Section provides supportive materials on legal obligations re: child support, spousal support, extraordinary expenses, equalization, etc. The following resources are offered as common issues/questions that may be relevant in many separations at some time. If you can anticipate these ‘common’ happenings then you may be able to work through them in a non-destructive way.

    Please do your own research.

    Many Family Law lawyers provide a one off-one hour session  to answer/clarify questions that you may have for a fee – without being their client. Cost likely $400-500. They are not acting as your lawyer at this time.

    The advice may provide clarity on the type of legal approach you wish to employ.

    General separation and finance articles

    There is an unending list of financial topics related to family breakdown. Many are specifically laid out in law re: financial responsibilities to children on a day-to-day basis through child support tables and extraordinary expenses. In addition, the law sets out the division of assets, settlement of debts and equalization. For many these require goodwill if the parents are going to navigate years of co-parenting.

    Articles are from government and newspaper websites. They may be dated and/or no longer available, but the topics remain relevant in most cases and allows you to do your own searches. They may help you determine the need for employing a lawyer or other support services.

    WARNING: The issues raised in the above articles often come from unusual situations specifically and impact the general population of separating families. Arriving at fair settlements should be your goal and not protracted legal settlements.

    Final Thoughts

     Economic survivability may be initially manageable but cannot survive the challenge/test of a job loss or unexpected health crisis.

    Budgeting for many two income couples has sometimes become a lost skill. It needs to be found-asap. Readings and tips may be found throughout the Resource Hub to help find low cost activities, etc.

    • Many couples need to separate/remove their names from accounts and credit cards ASAP.
    • Wills need to be updated, including possibly, the wills of grandparents!

    Money is a not so funny issue once a separation occurs. It can be a source of bitterness that impacts parenting relationships and used by one parent with the children in the blame game.