Financial Survival Through a Separation and Divorce

A separation or divorce is a major turning point in anyone’s life, and can present significant emotional and financial challenges. Financial issues, stressful even at the best of times, can complicate and worsen an already difficult situation if not handled carefully.

First and foremost, if you have separated or think you may separate from your spouse, you should consult a lawyer to learn about your legal options. There is useful information on this topic available from the Ontario Ministry of the Attorney General.

In the meantime, you should keep a record of all financial accounts and transactions. You may have bank accounts, lines of credit, loans, credit cards and other assets or liabilities on which you and your spouse each have separate signing authority. Be aware that financial institutions cannot intervene in the use of such accounts by either account holder, nor can they disclose any information about one spouse to another.

If possible, make an agreement with your spouse on the division of accounts, debts, and other responsibilities. Such an agreement can be informal or in writing, or you can write them into a legal separation agreement which you, your spouse and a witness must sign. Consult a lawyer to learn your legal rights before signing any agreement.

A separation agreement (or eventual divorce settlement) will typically cover the following issues:

• Child custody and access rights
• Spousal and child support
• Division of assets including pension benefits and CPP credits
• Division of debts including account overdrafts, lines of credit, mortgages, loans, credit cards
• Who will live in your matrimonial home, or if it is to be sold

You can separate your finances by setting up new accounts in your name and by putting your share of debts in your own name. If you are having trouble making ends meet, talk to a financial advisor. They may be able to consolidate your share of the debts into a single personal loan to reduce your payments and interest expenses. A Certified Financial Planner can help you assess all your financial options and can recommend strategies to help you chart a new course for yourself.

You should also review and update your will and powers of attorney to ensure that they reflect your wishes in the event of your death or incapacity. If you have no will or powers of attorney, you should consult a lawyer to put them in place.

Taking the time to assess your situation and your financial and legal resources can help you make sense of a potentially confusing situation. It may be difficult to get through this period, but it can be made easier by making informed financial decisions which will help you get your life back on track.