Cashing in RRSP’s and Divorce

In a recent Yahoo!Finance article, the author, Andrew Button, wrote that the average RRSP account that many Canadians have at age 71, is less than $300,000.

To make a simplistic illustration, let’s assume that a couple are divorcing at age 65.  If the amount of the couples RRSP is $300,000 and is totally in woman’s name, then her retirement income will be even smaller.  Why?  Because assets need to be split and/or, her RRSP’s will have to be cashed in.  There are all kinds of costs that are not considered when going through divorce such as legal fees, new furniture, taxation, a new car to name just three things.

For most people, RRSPs are often their largest savings other than the equity that they have in their house. If you must cash in RRSPs to pay bills remember this reality:

Use the following withholding rates for lump-sum payments:

10% (5% for Quebec) on amounts up to $5,000

20% (10% for Quebec) on amounts over $5,000

30% (15% for Quebec) on amounts over $15,000

CRA emphasizes that these rates are only estimates. Since no tax is withheld at source on the minimum amount, annuitants of these plans are required to pay the tax attributable to such payments no later than April 30 of the year following the year in which they are received, unless they are required to make instalment payments.  Also, if the annuitant is earning income, the cashed in amount must considered at tax time as well.  Always check with your financial advisor, about the implications of cashing in RRSP’s.

To make this clearer, let’s assume that a legal bill of $10,000 needs to be paid.  To get the $10,000 after tax from the RRSP, $12,500 must cashed in (12,500 – 20%).  The RRSP balance has reduced from $300,000 to $287,500.00 ($300,000 – $12,500)

Divorce comes with many costs, some of which are obvious and some of which are not.  For many people, working longer into one’s senior years is often reality.

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! 

How sharing your stories can cost a minor fortune!

In a recent case, I had engaged with a couple that were starting to work through the details of the financial split.  Even though the combined net worth of the couple was impressive, the after-tax and after – fees costs started to look more daunting than first realized.  One cost that the couple did not consider were the fees of their sympathetic advisors.

The couple started to realize that whenever they talked to their legal counsel about how rotten their soon-to-be ex was, the cost was at the hourly rate of the lawyer, which in this case was $500/hour for His and $525/hour for Her’s.  Because each had to have accountants, the cost for that expert advice worked out to be $375 and $400 per hour each.  It did not take them long to realize that the cost of the divorce could get over $20,000 in no time, for each of them!  If things had to go to court, at over $12,000 each time they were in front of a judge, this pragmatic couple realized that they should be more amicable or better yet, invest into a counsellor at less than $200/hour to perhaps save their marriage.  In one joint “zoom” call meeting that lasted one hour, the total bills were:  ($500 + 525) + ($375 + 400)  = $1800.00

This true story ended up with the couple reconciling, albeit, clumsily.  They realized that the fight was a not worth the money.  Will the marriage last?  Neither of them knows, but for now, they are willing to make accommodations to each other so that neither one of them will have to go back to work as they are both well into their 60’s.  Also, they both came to realize that finding accommodation in this high rent economy is next to impossible. 

I am attaching a link from the Globe and Mail that is about the financial risk of divorce as it pertains to the marital home.

Divorcing parents face tough choices amid sky-high real estate prices.

Dividing Property – Getting Your Fair Share

When two people get married, the happy couple enter at least two different partnerships, the emotional and the financial.  These partnerships begin on the wedding day and end on the date of separation.  For the purposes of this blog, it is my opinion that the separation of property is the easier of the two partnerships with which to deal.

Most young people getting married usually have more hopes and dreams than they have assets.  If fact, most young couples today bring a lot of debt into the marriage, be it in the form of student loans, automobile, and/or other consumer debt.  As the months and years go on, most couples start accumulating assets, while, hopefully, reducing their debt.

In a recent case with which I was involved, a couple, after 32 years of marriage, decided to divorce.  The couple started out like most young people at the time and after university, Mr. Y started working for the government.  That was 27 years ago.  He was an ambitious and capable employee and eventually worked himself into an important and prestigious position.   This career choice has resulted in, among other things, a great government pension and other lifetime benefits that he wants to trigger shortly.  Mrs. X was primarily a stay-at-home parent during that whole period.  Their comfortable home still has a modest mortgage and one of their vehicles is financed with three years remaining on the loan.

Both Mrs. X and Mr. Y had to work through a myriad of details if they were going to get divorced sooner than later. As mentioned in the first paragraph of this blog, they each had to work through the emotional challenges that they, their children, their friends, and their relatives all had.  The couple felt confident to tackle making the necessary financial statements that were necessary to split the assets.  The emotional strain each felt when having to sit down and do the work drained their energy.  It was simply more fun to binge watch the latest Netflix series.

Getting through a divorce can often be a litigious and costly affair.  Fortunately, there are choices each person involved in the divorce can make.  Luckily, provincial guidelines provide forms to help guide the process for the division of assets.  If the work is completed honestly, and accurately, the division of assets can be quite smooth and helps the Federal legal processes that determine if and how much support can be paid and for how long. 

My recommendation to this couple was to use a variety of people as resources to help them work through details.  Because separation and divorce are so emotionally charged, why shouldn’t Mr. Y and Mrs. X engage specialists to help them reach a fair and cost-effective financial settlement?   Lawyers, counsellors, mediators, collaborators, valuators, and Chartered Financial Divorce Specialists (CFDS) are just a few of the specialists that are available in the marketplace.

Creating a team of support during the divorce process can be the best thing each person can do.  Competent legal help is important, as is a good counsellor who can help each person process feelings of hurt and anger constructively.  The Certified Financial Divorce Specialist can provide process and insight as to how and why one might divide the assets in a certain way.  The CFDS should also provide Future Value calculations as to the long-term ramifications of one strategy over another. 

According to economist Dr. Thomas Sowell, “scarce resources have alternative uses.”  Time and money are limited for all of us, especially for those going through divorce. Recognize your own gifts and talents and hire experts in the areas in which you need help.

If you think you need my help in your divorce, fill out the contact form in this webpage and send it to me.  I will be happy to help.

Al Dyck – CFP, CFDS


Surviving Your Divorce, A Guide to Canadian Family Law, Michael G. Cochrane, LL.B., 6th Edition, 2015, pgs. 83 – 85

Basic Economics, A Common Sense Guide to the Economy, Thomas Sowell, 2015, pg. 2

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! 

Can a divorce be achieved without breaking the bank? Yes!

Recently, I helped a couple achieve their divorce without breaking the bank.  The couple, who I will call Mr. Y and Mrs. X, decided to separate, and divorce after many years of marriage.  Mr. Y and Mrs. X were not of the same opinion as to how to come to an arrangement that could satisfy both.  He wanted to work out the separation of assets and the details around spousal support without the help of anyone.  Mrs. X admitted that she did not have a clue how to work out the details and, perhaps even more importantly, was not able to think clearly about how to have a good discussion on these topics.  One thing was clear, they both knew that the marriage was over, and they needed to get on with life independent of each other.

Mrs. X reached out to me against the advice of Mr. Y.  Mr. Y was confident that he knew everything he needed to do because he had researched the topic on Google.  Mrs. X tried to do her homework with the help of her colleagues at work and her neighbor lady next door.  Neither wanted to engage the services of lawyers because the stories of high costs and long legal battles seem common in the marketplace.  Mrs. X was referred to me, a professional Chartered Financial Divorce Specialist (CFDS), by a colleague.  I was able to explain to her how she could proceed with confidence if she better understood the basic substance and some of the processes as outlined in the Divorce Act.  We also discussed that the separation of assets is governed by the province in which people reside.  This was very helpful to Mrs. X because the information she was getting from her next-door neighbor was about her cousin’s divorce in Prince Edward Island. 

Mrs. X accepted my services and shared the information that was provided to her with Mr. Y.  We all followed the process as outlined in the Engagement Agreement and within 5 months, determined 2 ways to look at how the division of assets could be achieved.  After some give and take on a few minor points, the “parties to the divorce” found a notary who drafted up the divorce agreement. 

In my opinion, the reasons why Mr. Y and Mrs. X got to this amicable split relatively quickly were:

  1.  Even though they were unhappy about the failure of their marriage, they both agreed that the marriage was over.
  2. Mrs. X and Mr. Y understood that they could not get more money from the other because of real or perceived injustices that occurred while being married.
  3. Mr. Y and Mrs. X were respectful of each other’s wish to look for a couple of ways to split the assets.
  4. Both “parties” found value in using a disinterested third party who could help them negotiate a solution that they wanted.

The professional fees that Mr. Y and Mrs. X were relatively low.  They had to pay for a professional valuation of the marital property, their recreational property, and their respective government defined benefit pension plans.  The fees of the CFDS and the Notary were focused on the solution they wanted as opposed to paying “fighting” costs.

In conclusion, a divorce can be achieved without breaking the bank!  In this case, Mr. Y and Mrs. X were invested in solutions that would help both have a hopeful financial future!

Ps.. this blog is a true story.  I have changed some details to protect the privacy of and location of these two people.

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 to thrive by everyone… individuals, families, churches, community groups, and all levels of government!  Like all noble endeavours, it takes hard work, sweat and tears to make something beautiful and worthwhile!  If divorce is the route a couple takes, then make the break clean, quick, and efficient… your financial future depends on it! 

My value as a Chartered Financial Divorce Specialist

In my experience as a Chartered Financial Divorce Specialist, I have been privy to many private and confidential stories.  People have shared anecdotes of heartache to relief and everything in between. One common theme, that is often shared, is how long it sometimes takes for the divorce to come to completion.

When I ask people why it took so long for their divorce agreement to come to fruition, the answer is often not about the couples’ attempts at reconciliation.  A common theme that is shared is that divorce was not a priority.  In a recent case, a couple, who had been living apart for 6 years, finally decided to get a legal separation.  I was asked by one of the people, what they should consider doing to proceed with divorce.  When I asked them if they had sought counselling or legal advice during this time of being apart, they both said “no”.  They were feeling rather ambivalent about their relationship, however, one person was now developing a new relationship with someone new and thought it might be prudent to “make things legal”.

Six years of separation made it difficult for both people to figure out how to unravel their joint banking accounts, the stuff in the house and what the divorce will mean as it pertains to their pension and retirement plans.  Both people in this unengaged relationship do not have a lot of money and are just not that motivated to do the things necessary to close one chapter and start new ones.  They just know that the marriage does not work but they do not seem to want to do the things necessary to come to closure. 

Providing value to this couple was quite easy.  Because this couple was not clear as to whether they should or should not divorce, it was best to refer them to seek the services of a mediator or a family counsellor. They need to gain clarity as to how to rebuild the marriage or to shut down the relationship.  My role as a CFDS professional is to provide services once the divorce decision is made and not before. 

 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! 

The Deal before the Deal!

In business and in life, deals are made all the time.  Sometimes the deals are big and momentous, such as the purchase of a new car or house.  Sometimes the arrangements are much smaller, like who is doing the laundry or who will wash the dishes or cut the grass.  The deal before the deal is the understanding as to what people will do and how things will be done.

A big arrangement that does not get as much serious attention as it should is the courtship period before marriage.  The dating period is where the “deal before the deal” should be worked out.  The understanding of roles, money, in-laws, careers, religion, health and where the happy couple will live are just a few the important things that should be worked out before getting married.

Marriage and family are usually figured out when people are in their early 20’s and are generally financially poor.  However, it is becoming increasingly common that people are getting married and starting families in their 30’s.  The more people that are starting marriage and families in their late 20’s and 30’s the more there is to consider because careers and wealth need to be thought about.  Sharing will be a new concept for these couples.  In situations where this is the case, it makes sense to meet with a counsellor in advance to discuss how to integrate these complex matters.  In fact, it may make sense to work out a pre-nuptial agreement.

I am attaching a link to a recent Globe and Mail article that describes the value of pre-nuptial agreements and how working through the details may help protect your marriage!

The Pledge… Enjoy the video!

Does Divorce and Separation have to be a “Blood Sport”?

In my last blog post, I wrote about how divorce and separation is a heart wrenching event, second only in emotional intensity to the death of spouse.  In my observations of the divorces and separation of the people that I know, anger is often the first emotion exhibited with denial and depression being the next two emotions.  After these people have processed these initial feelings, they usually follow with the desire to fight.  Hurting people generally reach out to are those skilled in adversarial legal system, namely, lawyers.

The best people to represent you are those that can do the work, quietly and efficiently, behind the scenes.  While lawyers are very skilled in their craft, there are others that can be very practical and less costly.   Joselin Corrigan, a BC Certified Family and Third-Party Mediator, ( told me in a recent interview that a trained and professional person can bring about healthy results in marriages that fail.  She went on to say that:

‘Mediation allows you to nurture and learn positive communication skills to reach common ground. It is a suitable and often better solution to sorting your dispute rather than settling in a courtroom. Mediation isn’t a form of therapy; however, it may still touch on personal issues and relationships. You can feel secure knowing that any personal information you share with a professional mediator is kept confidential.  A good mediator helps people have more productive conversations and can help to craft durable agreements in an environment that is safe, confidential, creative, and, in the case of family mediation, can include the perspectives of their children.’

I have added a link describes 5 stages of mediation that may be useful to anyone contemplating mediation.  For the best results, engage the most competent mediator you can find to help you and your soon to be “ex” reach a settlement that has lasting qualities.   Good luck!

If you live in the Kootenay Region of British Columbia and want to correspond with Joselin Corrigan, she can be reached at her website:

Have a great week!

Al Dyck


Fight or Flight or is there another way?

In the classic book by Elizabeth Kubler Ross, “On Death and Dying” (1969), the author states that there are 5 stages of grief people go through when they experience the very bad news that death is imminent.  The 5 grief stages that people go through when confronted with one’s stark mortality are: 1) denial, 2) anger, 3) bargaining, 4) depression, and 5) acceptance.  The Swiss American psychiatrist made the point that most people go through this process but not in any specific order.  The 5th stage, acceptance, is always last. 

Recent publications since Kubler Ross’s pioneering work now suggest that there are 7 stages of grief.  These stages are 1) shock and denial, 2) pain and guilt, 3) anger and bargaining, 4) depression, 5) the upward turn, 6) reconstruction and working through, and finally, 7) acceptance and hope.

Noted American counsellor, Dr. Carol Hughes, writes, “divorce is the second highest stressor for humans, second only to the death of a spouse.  Why is divorce so stressful?  When we view divorce through the lens of British psychologist, psychiatrist, and psychoanalyst John Bowlby’s attachment theory, it helps us understand the reason why divorce is so stressful.  Attachment theory states that we humans have a biological predisposition to form attachment bonds (strong emotional ties) with significant others to have a secure haven and safe base where we can thrive and return for support and comfort during times of need, stress, and crisis”. 

So, based upon these experts on pain and suffering, when one spouse says to the other that they want a divorce, it makes sense that the surprised spouse will go through these stages in one way or another.  The length of the process is uniquely individual and usually lasts longer than 2 years.

It stands to reason that normally rational and calm people, when confronted with the “death” of a relationship, will loose their cool and do things that don’t necessarily make sense.  Reaching out for help from friends, relatives and a lawyer that is totally invested in the adversarial legal system may put you on a track to spend a lot of money to quickly.  There may be other ways to get help to work through this challenging time.  There are certified mediators and legal collaborators who may be very useful in helping people navigate this very trying emotional time. 

Here is a link to this topic that you might find of value.

My next blogs will discuss the value of seeking out qualified mediators and collaborators. 

Lawyering Up!

In my role as a Chartered Financial Divorce Specialist, I am taking much more interest in the stories that occur between couples.  Over the past several years, I have listened to stories of how couples can fight tooth and nail over seemingly minor details or things can go nuclear as this story shows.

This story, (which did not happen in the Kootenay region), started within a few years after the wedding.  To quote Rodney Dangerfield, he was born under the earth sign, and she was born under the water sign, and together they made mud!  Within a couple of years, their relationship deteriorated to the point where separation and divorce became inevitable.  The animosity that existed between them escalated to the level where communication between them was through their lawyers. 

The man was driven by money.  He was exceedingly avaricious and had gone so far as to open over 10 different bank accounts in a variety of banks, credit unions and investment houses in his name or in shell company names.  This was done to hide financial assets from his wife, who was a shareholder in the business.  To make a long story much shorter, she ultimately had to hire a forensic accountant, who with the help of her lawyer, was able to find all the hidden assets.  Ultimately, the divorce finally settled after 13 years. 

During this long-drawn-out process, it was determined that:

  1.  The man hired and fired 7 different lawyers.
  2.  They went to court 10 times.  The man lost in court each time and had to pay court costs each time.
  3. The lady, who was a shareholder in the business, was not involved in the day-to-day intricacies of the enterprise.  She took care of the home and the children while her husband went to work each day.  She trusted that he would do the right thing by providing a nice living for them and the kids.
  4. The man interacted with shady accountants and lawyers to shield his interests from his wife and children.
  5. The lady thought that the legal system would work quickly and efficiently.  She found out that she had to fend for herself at a very high cost. 
  6. Fending for herself has meant that she needed to push on the legal system to enforce support payments for herself and the children.
  7. Fending for herself also means that the restraining order on him continues to this day.
  8. While not privy to the final legal bills, the court costs alone were in-excess of $100,000.00.
  9. Each of their lawyers cost around $500/hour.

It is not hard to determine that when both lawyers and the accountants had joint meetings to see if things could be settled out of court, the cost of each meeting was approximately, $2,000/hour.

In conclusion, this divorce story is a one of the nastier fights of which have heard.  As for the lady, she was able to get on her feet very quickly.  Happily, she was able to find a job that provides for herself and the children.  Her job pays a decent income with benefits and a modest retirement package.  She gained possession of the marital home as part of the 50/50 split of assets.  Her legal and accounting bills were enormous, and fortunately, she received enough cash after the equalization process was completed, to pay her legal and accounting fees. 

The amount of money that went to pay the legal bills was staggering, over $200,000 each.  The lady will have to work well into her 60’s to build up her Canada Pension Plan benefits and her RRSP’s, but she is happy now.  Her children are all very industrious.  The combination of the modest child support payments, summer jobs and student loans mean that that they will all graduate from university with degrees that are good for getting employment.

As for the man, no one really knows where he is or what he is doing.  His engagement with his children became non-existent when he left the home just over 20 years ago.

When One becomes Two : The Separation of Assets

The marriage vows that almost all of us share with our spouses, before witnesses, are referenced from the Bible, Genesis 2:24.  This common vow says, among other things, that two people become one entity, until “death do us part.”

This vow, in my opinion, forms the basis of todays blog.  Several weeks ago in a previous blog, I wrote that in an ideal world, all marriages should last a lifetime.  However, we do not live in a perfect world, and we have all witnessed, or even experienced firsthand, the reality of separation and divorce.

Canadian federal law guides the terms of separation and divorce, whereas each provinces’ laws dictate how property should be divided.  In my blog’s introduction, I referenced that most marriage vows state that two people become one and that the case law of each province state that the property acquired during that union is to be divided 50/50, (albeit with a few exceptions), when that union turns “one into two”.

From time to time, there seems to be some confusion as to what property is.  The definition of property for separation and divorce varies little from province to province.  According to the book, “Surviving Your Divorce” by lawyer Michae G. Cochrane, LL. B, (pgs. 85 86, LegalIntel, Toronto, Ontario, 2015) couples that divorce should include everything that they have acquired during the time of cohabitation.  This includes, but is not limited to:

The matrimonial home

Household contents


Art Collections

Joint Savings Plans

Retirement Savings Plans

Tax Free Savings Accounts

Pension Plans

Cottages and Cabins

Severance Payments

The family business

Rental Property

Time Shares

Etc., Etc., Etc.,

The value of some things is easy to determine whereas, other things are more complex and will require the services of a 3rd party expert.  Future blogs will get into the challenges and the nuances of splitting these valuable assets in order to reduce confusion, fighting and ultimately, the cost of divorce.