Divorce is never easy and your heart may be broken, but that doesn't mean your wallet needs to be too

From before the divorce to negotiations to post-split, follow these common sense tips for a split that is financially fair and fits your family situation

The average cost of an uncontested divorce is $1,845, but a contested divorce can cost anywhere from $6,145 to $87,974, with the average being $13,638, according to Canadian Lawyer’s 2015 legal fees survey. But this doesn’t factor in moving fees, new living expenses, the division of your assets and debts, and possibly child and spousal support.

No surprise then that to reduce money stress, nearly one quarter of divorced or separated millennials and Gen-Xers delayed their divorce because of unexpected costs, a recent TD survey found.

“I have a friend who is in for $280,000 (in legal fees),” said Dean Bergsma, an Edmonton-based divorce mediator. “It’s been going on for four or five years and it’s a complex case … But divorce does not have to be expensive.”

It’s possible, he said, to have a split that is financially fair and that fits your family situation without having to go broke. Here are 13 tips to having a money smart divorce.

BEFORE THE DIVORCE

1. Educate yourself about your finances

“With so many people, their level of financial literacy is not very high. On top of that, they may not be involved in the family finances,” said Sharon Numerow, a certified divorce financial analyst at Alberta Divorce Finances. “The less you are in the know, the less you’re equipped to make decisions, and divorce demands permanent decision making.” Start by figuring out what you and your spouse have in terms of assets and debts. Print out your financial statements. If you’re lost, consider seeking guidance from a financial adviser.

2. Make yourself a budget

How much are each of you currently making and how is that spent? Now, if you leave, how much will you need to cover rent, living expenses, vehicle costs, child-care fees or possibly child support and maybe spousal support, etc.? “The biggest challenge for couples going through divorce is now we’re going to take the same pot of money and try and support two households rather than one,” Numerow said. “A couple would need 30-per-cent more income to enjoy a similar standard of living in two households as they did when they were in the same home.”

3. Check your emotions

“There are big problems when people decide they’re going to be real jerks,” said Wendy Olson-Brodeur, president of The Financial Divorce Specialist Inc. “You can find yourself a real hard-nosed litigation lawyer and fight for every drop of blood. That is going to cost a lot of money and you just don’t know what’s going to happen at the end of it.”

4. Don’t do stupid sh*t that you’ll pay for later

For example, don’t run out and max out your credit cards or spend all your money on a trip to Vegas with the boys because you’re assuming that half of it will be covered by your soon-to-be ex, Bergsma said. “Once you start into that vortex of conflict and everybody is out to get the other person, you can’t get off the train.”

5. Consider your options for the divorce process

In a divorce, people can self-represent; they can seek help from a mediator; or they can also choose a collaborative team that may include lawyers, mediators, counsellors, child specialists and a financial analyst. In Alberta, mediation can range from $300 to $700 per hour. The hourly rate for collaboration will likely be more, because you’re paying for multiple professionals. Meanwhile, certified divorce financial analysts may charge $150 to $300 an hour. “Spend a bit of money on the process in the beginning so you’re not spending a lot of money trying to fix it later on,” said Darren Gingras, chief executive of The Common Sense Divorce. (The average cost at The Common Sense divorce is $4,500 per person for the services of a team.) The Canadian Lawyer’s Legal Fees Survey estimates that a family trial of up to five days costs an average of $35,950.

DURING NEGOTIATIONS

6. Understand how much you may pay or receive in child support

Child support is mandated by the law and is based on custody. “The more time that a child is with one parent, the other parent is more responsible financially,” said Faisal Karmali, a certified divorce financial analyst at Popowich Karmali Advisory Group CIBC Wood Gundy. In the case of a full custody situation, an Ontario resident making $60,000, would pay $546 a month in child support for one child and $892 for two children. The final amount varies as determining income can become complicated if the calculation includes dividends, bonuses, corporate income, etc.

7. Be aware that spousal support is not a given

It is negotiable. For example, you may offer to give up an asset in lieu of spousal support payments, or agree to pay for a certain period of time. “If applicable, the amount and duration is negotiable. You may offer to pay a lump sum, make periodic payments — which can be reviewed at a future time — or pay a combination of both,” said Matthew Ball, president of Fairway Divorce Solutions, a dispute resolution company.

8. When you split up, you split everything, including debt

“I’m dealing with a young gal who’d been married maybe four years and found out that her spouse has an addiction problem with gambling. The debt keeps going up and up,” Olson-Brodeur said. “The problem is that the law doesn’t necessarily protect us. She will likely be responsible, from a legal perspective, for paying half of that debt back.”

9. Be mindful when choosing your half of the pie

Half today isn’t always half tomorrow. “Let’s say I’ve got a car worth $50,000 and a pension worth $50,000,” Olson-Brodeur said. “I agree to take the car while my spouse gets the pension. Guess who’s ahead in the long run? The pension as an asset grows over time while the car keeps devaluing.” Your assets may also have tax implications, such as taxes owing when you sell profitable equities.

10. Don’t anchor yourself to your home at all costs

“Divorce the house before you divorce the spouse,” Karmali said. “I’ve seen many people, primarily woman, who’ve stayed in a house they can’t afford … They may be giving up on other cash, retirement savings, education savings and, all of a sudden, they’re left with the expenses of taking care of a home and other expenses.”

11. Consult an expert about legal and financial issues

“Don’t make assumptions about the settlement before you have your facts,” Bergsma said. “The Internet is a wonderful place to look at picture of cute kittens. It’s a lousy place to get your legal information.” For example, you may assume that you will receive half your wife’s inheritance in a divorce, but it may be excluded from the division of property if it’s been kept in her name. Or you may be surprised when an Alberta judge uses the current date to determine the value of your assets. (Ontario courts use the date of separation.) Imagine having your day in court four years after you’ve separated and finding out that half of your savings from the last few years is going to pay for the debt that your soon-to-be-ex has since accumulated.

AFTER THE DIVORCE

12. Be aware and live within your means

“Many people (think): ‘I’m 40-years-old. I’m pressing the reset button. I refuse to move into a condo. I refuse to not have my Audi,’” Bergsma said. “People make poor choices because they’re emotionally hurt and they’re doing retail therapy, just with bigger numbers.” You also want to be prepared for the unexpected: for example, what if your ex injures himself, can no longer work and therefore does not have income to pay spousal support?

13. Don’t be afraid to revisit the agreement terms

Hopefully, this is done amicably if circumstances change. Some contracts are non-negotiable, others have time provisions written in so couples can revisit terms such as spousal support. “Right from the beginning, set up roads of negotiation because then after the agreement is done, if things need to be addressed, you’ve already got a process in place,” Gingras said. “Choosing a process that is amicable is better for the kids, better for your finances and, ultimately, better for you.”

Source: http://business.financialpost.com/personal-finance/managing-wealth/divorce-is-never-easy-and-your-heart-may-be-broken-but-that-doesnt-mean-your-wallet-needs-to-be-too

3 Reasons to Wait for Your Divorce to Be Finalized Before Dating

Regardless of your family situation, when you're in the middle of finalizing divorce procedures, you may feel the urge to start seeing someone else in order to move on with your life. Despite the fact that this is a completely understandable and normal way of moving on from a difficult relationship, problems may arise if things have yet to be completed.

Often, you’ll hear advice that counsels spouses to avoid dating until the divorce is complete. This advice may be difficult to follow, especially when normal feelings of loneliness surface or you end up meeting someone who creates a spark that you haven’t felt in a while. Unfortunately, the legal system is obliged to uphold the letter of the law, which means that courts are far less interested in the spirit of the law. As a result, it’s often best to wait until things are over before beginning to date again.

1. Dating Is Easily Misconstrued as Adultery

Depending on the nature of your divorce proceedings, including the jurisdiction in which you file your motion, the legal application of the concept of adultery could end up having a huge impact on your divorce. Depending on these variables, you may be in a situation where the law allows for special considerations when adultery enters the a divorce.

If the judge believes that one partner has been unfaithful, the court may end up deciding to place more of the onus of the divorce on your behavior instead of your spouse, leading to an inordinate amount of blame pointing to you for the breakup of the relationship.

In the event this happens, probabilities dictate that you will end up having to pay more alimony or receive less spousal support than if you weren’t seen to be conducting your personal affairs in a way that may be considered adultery.

The worst case scenario tends to occur when a spouse unsuccessfully attempts to hide a dating relationship from their former partner, which is likely to create significant problems during your divorce. Even worse, email, text messages, phone calls, and all communication activities may easily be tracked and brought to the forefront, making your case look even worse in the eyes of the court.

Even if your divorce is a relatively amicable split, your ex-spouse may use this fact against you in order to make sure that their interests are protected.

2. May Increase the Cost and Length of Divorce Proceedings

Since adultery can be considered a concern in the eyes of the court, anytime someone is dating another during the proceedings of a divorce, suspicion may be raised by the other party in terms of when the relationship started, and whether or not this relationship was part of the cause of the divorce. This can lead to incredibly awkward situations for all involved, leading to additional costs and time spent arguing in the courtroom.

Your new partner may actually be called to the stand to legally testify the facts, including issues such as the first time that the both of you went on a date and the first time that sexual intercourse took place in the new dating relationship. Other revelations may be pushed to the forefront, revealing your spending habits towards your new date and the activities that the two of you partake in.

All of these complications may pop up anytime you’re dating during a divorce, even if you and your date have done everything in an honest and open manner. In legal terms, your behavior may not be seen under the same innocent light. Even holding hands with a date after going to a movie may be presented as proof of unfaithfulness in marriage, twisting something positive and normal into a negative headache.

In addition to financial penalties, if your new dating relationship is deemed to be inappropriate, the custody rights you have for your children may also be permanently affected. In this scenario, simply introducing your new date to your kids may be considered an act that is contrary to maintaining a positive atmosphere for your children.

It should be repeated that even if your children and ex-spouse are completely comfortable with their parents dating other people during the case, the divorce court may still interpret your personal behavior as something that negatively affects the happiness and growth of your children. This leads to a greater probability of restricted visiting rights and other  restraints on your ability to see and parent your kids.

3. Zero Chance of Legal Repercussions After Full Separation

Considering the fact that divorce proceedings can range from simple and amicable to complex and adversarial at a moment’s notice, it’s always a good idea to avoid complications during the divorce. The more variables that are added to the case, the longer and costlier that the potential outcome will be. As such, the best reason to wait until your divorce is finalized is simply the fact that you cannot suffer legal repercussions for dating after divorce.

When you and your spouse are fully separated with monetary and filial concerns worked out to a reasonable and satisfactory solution, you’re completely free to date whomever you want, whenever you want, without having to worry about how it will affect the rest of your life.

The fact that your new partner can be dragged into court to testify against you should be enough to convince you that it’s a terrible idea, even if you’re not worried about the financial outcome or custody of kids after the divorce.

Resist the Urge to Date While Divorcing

Most people are completely understanding when it comes to dating while you’re undergoing a divorce, recognizing the simple fact that human beings need companionship, often more so when going through one of the most stressful events that a person may experience. The truth is that the legal divorce system is rarely capable of processing this type of nuance when it comes to interpersonal relationships.

As a result, the amount of trouble that you may potentially experience multiplies when you date during proceedings. Not only can your entire case be considered in a completely new and unfavorable light, but you also risk severe monetary penalties as well as a reduction in your custody rights.

If at all possible, wait until your papers are completely settled before looking to heal a wounded heart through the love of another.

Source: https://www.divorcemag.com/articles/reasons-to-wait-for-your-divorce-to-be-finalized-before-dating/