Life can be complicated!
I was recently hired to help a couple determine how to divide the money and assets of their marriage. This couple, Mr. X and his wife, Mrs. Y had been married for approximately 21 years. Mr. X and Mrs. Y created a mixed family immediately as Mrs. Y had a daughter from a previous relationship. Mr. X embraced both Mrs. Y and her daughter as his own family, even though the young lady was never formally adopted by him.
As time passed, the young lady had a son when she was in Grade 12. The parents supported the daughter and the boy as best they could. This is where the story gets complicated. Seven years ago, the daughter decided to move to a new community with her son in order to take a job as a beautician. She believed that she could earn a good living working within an established shop. But things did not work out as well as planned for them. She could not earn enough money to cover rent or food which resulted in her having to reach out to her mom and her mom’s husband for support.
Six years ago, “stepdad” took money from his own inheritance account and purchased a house for the young lady and her son to live in. His goal was to provide accommodation for his “stepdaughter” and her son. Unfortunately, the hairdresser lady only worked intermittently and could not pay fair market rent, even at family rates. This forced “stepdad” to underwrite the lifestyle of he and his wife and the daughter and her boy. Covering the costs of these two households used up all of his monthly income. Then three years ago, Mrs. Y left Mr. X to live with her elderly parents in another part of the province. She, Mrs. Y, has decided that she now want to divorce Mr. X, which means that there will be a division of assets and probably spousal support payments that will need to be paid.
I was hired to help this couple find ways to divide the assets of this couple. My job, as a financial neutral, is to understand the situation and be empathetic to the family dynamics while being focused on finding a variety of options for their consideration. Here were some things that I had to take into consideration in order to help them:
- The value of his pension plan that needs to be split.
- The value of the savings plans that needs to be split and the tax implications of those splits.
- What property is to be excluded from the calculations.
- The spending plans that each person have to consider, depending on the choices of how assets might be split.
- How to share the information to the divorcing couple that the decision to divorce was going to have implications not only for themselves, but also for the daughter and her son.
As a professional, my job is to lay things out in a way that reflects the reality of the situation. For me, this meant that I had to be candid, but not harsh or cruel in how I delivered the message. The decision to divorce was theirs and the fallout of that decision is something that they will have to come to terms with, which may take a lifetime.
Note: I am in favour of marriage! Healthy and happy families are the primary units of a strong and vital society and should be encouraged! Like all noble endeavours, it takes hard work, sweat and tears to make something beautiful and worthwhile! If divorce is the route a couple take, then make the break clean, quick, and efficient… your financial future depends on it!