In my role as a Chartered Financial Divorce Specialist, I often get the question, “Who do I represent?”  The short answer is “Both”.  This answer is sometimes confusing to the individual who is looking to hire me because they are looking for aid to get as good a deal as they can from their soon to be “ex’s”. 

It has been my experience in my 30+ years of being in the financial services industry, that most people think that to get ahead, another party must lose. It is often assumed that in the competitive marketplace in which we live that all the available wealth is akin to a circumscribed pie, which can only be divided in such a way that is perfectly 50/50, with no allowance for creativity. 

Separation and divorce are often the most acrimonious event in a couples’ and in a family’s lives.  In a recent case that I was witness to, a common-law couple were splitting up after 11 years. From the outset, both the man and woman said that they wanted the best for their two children.

When it came time to show the assets, incomes and liabilities, both the husband and wife became protective and vague about what they had or did not have.  When it came time to show their debt, they both were overstating the severity of each of their obligations and debts. Assets were understated, income was tenuous, and debts were extremely hard to deal with. Life was extremely difficult indeed for both the husband and the wife.

I found it necessary to remind them that their fictional stories were not helping their desire to separate and divorce in an efficient way.  I had to tell them that my job as a Chartered Financial Divorce Specialist, was to be a “Financial Neutral”.  We had to find a way to see the world as it really was, so that they could move on, considering their desire to work for the benefit of their young children.  In short, I was working with each of them to build a financial plan that they could follow until both children finished their post-secondary education.

In my capacity as a Chartered Financial Divorce Specialist, I have found that working within a collaborative problem-solving process is an ideal path to follow.  The term “collaboration” is a concept that is foreign to many of us, even though the word is common.  The collaboration process can work especially well when emotions are high, and trust is fragile. 

Being a Financial Neutral sometimes means that one person hires me and not the other.  This makes things more difficult, however, in the process of working through the finances, full disclosure is always necessary for the equalization of assets to be determined.  For example, if I only complete one party’s calculations and guess at the others, then my work, when presented for review, will be rejected as inaccurate by the other’s spouse and their legal counsel.  This will result in wasted time, effort and loss of credibility for the person who hired me and of course, for me.  It is also a waste of the client’s money.

It is for this reason, that even if one person hires me, ultimately, I am working for both people and their families.

In conclusion, as a financial neutral my goal is to help couples in a collaborative divorce make informed decisions about their assets, income and expenses.  I can help couples to:

1. Understand the financial implications of their separation.
2. Express their financial interests
3. Make decisions about keeping or selling properties
4. Address long-term financial implications
5. Focus on reasonable outcomes
6. Begin to make financial decisions about their futures as a single person

In this past year, I have been engaged in many discussions where the decision to separate and then divorce has been contemplated for a long time.  In one case, the decision to divorce had been contemplated for over 18 years, in another, 12 years, in another, 7 years.  The shortest period was made after 2 years.  In my short career as a Chartered Financial Divorce Specialist, the decision to separate and then divorce has always been deliberately and seriously made.

My role as a Chartered Financial Divorce Specialist is to assist in helping couples to separate the assets fairly to reach a 50/50 split.  The way to get to 50/50 can take a variety of paths depending on the priorities of each person.  In one situation, one person was moving away from the community and therefore had no desire for the marital home.  In another instance, one person, who had custody of the children, wanted the marital home.  Yet again, in a more complicated case, the cash flow from the family business created a desire on one person’s part to stay involved in the day-to-day operations while living in a new condo with a new partner.

In my experiences to date, the decision to separate was usually made quite quickly. The more complicated and lengthy part of the divorce has been to figure out the separation of the money and assets.   In Canada, it usually takes a year of living separately before a divorce is granted under the “no-fault” guidelines of the Divorce Act.  While divorce can be granted in less that one year, if adultery, physical or mental abuse can be proven, most couples opt for the one year of separation.  For these people, they use the lead time to negotiate the split of assets and money.  Often the most complicated aspect of the negation is how to calculate child and spousal support.    

My goal, as a Chartered Financial Divorce Specialist, is to help couples get to closure as quickly as makes sense.  Most people want to start a new chapter in life, once they have determined that the previous chapter has ended.  The future value of those decisions can be enhanced if the separation of assets can be reached sooner than later.

• Always check with and understand the property laws of your province *

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! 

I recently finished a course that was titled, “Managing & Resolving Conflict to Discover the Wonders of Collaboration”.  As a Chartered Financial Divorce Specialist, my job, as a financial neutral, is to help bring about financial fairness in a separation and divorce. 

 Many people have pre-conceived beliefs as to how the world works.  They assume that all their experiences and education make up the sum of all wisdom on any subject.  These beliefs often create an inflexible or rigid “line in the sand” which often results in a win-lose outcome.  But what if we can seek and achieve win-win outcomes?

Many of us enter marriage with the belief that it will be “till death do us part”.  For about 50% of the population that marry, this vow holds true.  For the rest of the population that either marry or live common-law, the splitting of accumulated wealth, possessions and family units is often fraught with disappointment, anger and gamesmanship.  Why?  In my opinion, it is because people either do not have good models of problem-solving techniques or fail to use them appropriately.   It is for these reasons, that negotiating for yourself is often a bad idea.

My role, as a financial neutral, is to use collaborative problem-solving methods to achieve a win-win outcome.  If you wish to engage me, either in your pre-nuptial, nuptial or post-nuptial planning, please fill out the contact form in my website.

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, clubs and all levels of government.

My last blog, Spending Plans (aka Budgets) Part 1, we were privy to the budgeting challenges of my clients, Jack and Jill.  You will remember that both Jack and Jill each had some money left over at the end of each of the last four months.  Jack averaged a surplus of $133.35/month and Jill averaged a surplus of $155.05/month through the months of February to May.

In the month of June, Jack made the decision to leave Jill.  He moved to an apartment and set up a new home for himself.  With all the changes in living arrangements, both Jack and Jill’s financial rhythms had to be totally restructured.  Some bills will stay the same, others will be duplicated, and some new bills will start for one or both people.  Separation and divorce create new complexities that compound the already stressed situation.  Here are Jack and Jill’s expenses from June through to the end of August.

Jack’s Monthly Net Income                              Jack’s Expenses (3-month average)

$7,091.49                                                           Rent                     $2018.00

                                                                             Groceries             $ 736.00

                                                                             Dining Out           $ 284.00

                                                                             Cable TV              $ 147.29

                                                                             Electricity            $ 286.68

                                                                             Life Insurance     $   62.62

                                                                             Monthly Svgs      $ 200.00

                                                                             Truck Pmts          $ 890.78

                                                                             Renters Ins          $   22.24   

                                                                             Monthly Poker   $ 177.00

                                                                             Clothes                $ 298.00

                                                                             Gasoline              $ 418.00

                                                                             Truck Insurce       $ 186.19

                                                                             Furniture Rent    $ 327.28

                                                                             Cannabis/Tob     $ 549.34

                                                                             Camper Trailer   $ 487.87

                                                                             Total                    $7091.29

(Jack averages a $0.20 surplus at the end of each month)

Jill’s Monthly Net Income                                 Jill’s Expenses (3-month average)

$5,394.43                                                           Mortgage            $1327.98

                                                                             Cable                   $ 190.68

                                                                             RRSP’s                  $1500.00

                                                                             Toiletries             $ 149.84

                                                                             TFSA’s                  $1000.00

                                                                             Nat Gas               $   52.00

                                                                             Electricity            $ 196.00

                                                                             Housekeeper       $ 000.00

                                                                             Family Gifts         $ 000.00

                                                                             Car Payments     $ 656.98

                                                                             Car Fuel               $ 128.24

                                                                             Home Maint.      $ 000.00

                                                                             Total                    $5201.72

(Jill averages a $192.71 surplus at the end of each month)

When Jack moved out to live in his own apartment, the net effect of his spending pattern resulted in him living in a high rent complex.  The rest of his living costs did not change significantly.  The big exception to his costs was the purchase of a camper trailer that will cost him $487.87/month for the next 15 years. 

Jill had the capacity to adjust to taking over the marital home costs.  She chose to reduce the rate of savings of her TFSA from $1500/month to $1000/month.  She also chose to eliminate paying for family gifts ($65/month), she gave up her housekeeper ($210/month) and stopped the home/yard maintenance program ($412.16/month).

Jill is in quite good financial shape because she is quite disciplined in her day-to-day spending.  Jill is relatively humble in her needs and was able to make the difficult decisions as to where to cut costs and save money.

Jack enjoys living in the moment and looks to have excitement.  He was able to fill the gap in his budget by purchasing the camper on credit. 

My job as a financial neutral is not to pass judgement on Jack and Jill’s respective spending decisions.  Both Jack and Jill have more work as they proceed toward dissolving their marriage.  The costs of splitting assets and paying for the divorce are still to come.  Happily for each of them, they have yet to dip into their savings plans to pay for things.

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, clubs and all levels of government.

It is common sense that to get ahead in life we need to live within our means.  The definition of “means” is simply our income, be they wages for our work, income from investments and any government benefits such as Old Age Security.

When couples separate and divorce, it is a requirement for each person involved to show their income and expenses so that support can be properly calculated.  In a recent case with which  I have been involved, both the lady (Jill) and the man (Jack) had difficulties determining their respective incomes and expenses, before the split up.  I had to explain the best way to think about income was the amount of money deposited because the terms “gross” income and “net” income were not clear to either of them.  We also had to explain what “fixed” and what “variable” expenses were as well.

The way we helped them individually was to have them find their respective bank and credit card statements for the past 4 months.  We identified the recurring money deposits that each of them had and had them write down that amount in one column in a notebook.  We then looked at their spending or withdrawals during each of those months and listed them in another column.  We were able to find the recurring expenses and identified them as either “important” (fixed) and those things that were “nice” but not vital to their welfare (variable).  Here are Jack and Jill’s average incomes and expenses for the months February through May.

Average Monthly Income and Expenses:  February to May 2024

Jack’s Monthly Net Income           Jack’s Expenses (4-month average)                                                                

$7,091.49                                        Mortgage (PI)               $1,327.98                                                 

                                                         Groceries                        $625.48                                                                                                            

                                                          Dining Out                    $319.66                                                                                                            

                                                          Life Insurance               $ 62.62                                                                                                                        

                                                          Monthly Savings           $200.00                                                                                                            

                                                          Truck Payments           $890.78                                                                                                             

                                                          House Insurance          $147.18                                                                                                             

                                                          Monthly Poker             $129.16                                                                                 

                                                          Clothes                           $428.16                                                                                                                       

                                                          Gas for Truck                $368.18                                                                                                             

                                                          Trk Insurance                $186.19                                                                                                             

                                                          United Way                  $50.00                                                                                                               

                                                          Home Furniture            $1,698.87                                                                                                          

                                                          Cannabis/Tobacco       $523.88

                                                          Total                              $6,958.14                                                                                                                                       

                       Jack has on average, $133.35 left over at the end of each month.

Jill’s Monthly Net Income              Jill’s Expenses (4-month average)

$5394.43                                         Cable                             $190.68

                                                          RRSP’s                         $1500.00

                                                          Family Toiletries           $278.19

                                                          Short-term TFSA         $1500.00

                                                          House Taxes                 $368.00

                                                          Natural Gas                  $52.00      

                                                          Electricity                      $196.00

                                                          Housekeeper                $210.00

                                                          Family Gifts                  $65.00

                                                          Car Payments               $656.98

                                                          Car Insurance               $211.56

                                                          Car Fuel                        $98.91

                                                          Home Maint.                $412.16

                                                          Total Expenses             $5239.38

                             Jill has on average, $155.05 left over at the end of each month.

In Part 2, we are going to look at their respective spending plans after Jack and Jill split up in June.   

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! 

In my role as a Chartered Financial Divorce Specialist, I often get the question, “Who do I represent?”  The short answer is “Both”.  This answer is sometimes confusing to the individual that is looking to hire me because they are looking for assistance to get as good a deal as they can from their soon to be “exes”. 

It has been my experience over my 30+ years of being in the financial services industry, that most people think that to get ahead, another person must lose. It is often assumed that in the competitive marketplace that we live in, that all the wealth available is akin to a circumscribed pie, which can only be divided in such a way that is perfectly 50/50, with no allowance for creativity. 

Separation and divorce are most often an acrimonious event in couples’ and family’s lives.  In a recent case that I was witness to, a common-law couple were splitting up after 11 years. From the outset, both the man and woman said that they wanted the best for their two children.

When it came time to show the assets, incomes and liabilities, both the husband and wife became protective and vague about what they had or did not have.  When it came time to show their debt, they both were overstating the severity of each of their obligations and debts. Assets were understated, income was tenuous, and debts were extremely hard to deal with. Life was extremely hard indeed!

It became important to remind them that my job as a Chartered Financial Divorce Specialist, was to be a “Financial Neutral”.  My job is to serve them to reach their stated goal to do the best possible for their benefit of the children. In short, I was working with each of them to build a financial plan that they could follow until both children finished their post-secondary education.

Collaborative problem solving is an ideal that is foreign to many of us, especially when emotions are high. It is for this reason, I encourage clients to work with family counsellors, mediators and lawyers that specialize in this type of dispute resolution. The alternative is usually a long and protracted fight.

Negotiating the divorce agreement is often a emotionally charged process.  In the financial planning work that I have been a part of, the memory that one person has is not always the same as the other.  In one recent case, where the couple was divorcing after 6 years, both could agree that they started living common law during their university years.  They both agreed that each of them had no savings and had student loans of $12,000 and $17,000 respectively.  Six years later, her debt load was $8,000 and his was $14,000.   Their net worth, (what one owns – what one owes) was reputedly $13,000.  The divorce agreement which had been crafted by the lawyer reflected this “reality”.

The reason that I use the word “reputedly” was because one of the people chose not to disclose to the soon to be ex, nor to the lawyer hired, a small lottery win at the local casino of about $25,000 in the previous year.  The money that the lucky person used to have fun came from their joint chequing account and the winnings were deposited into that person’s secret individual savings account.  When the $25,000 was added to that savings account, the total value that the person had hoarded was just over $30,000.

When the secret account came to light, after the divorce agreement was signed, the offended party fought back.  The original agreement was set aside due to “material misrepresentation” and a new divorce agreement had to be struck.  The result of this act was that more fees had to be paid by the greedy and duplicitous partner.  Perhaps, more importantly, the reputation of the person who tried to cheat the other was even further diminished.

Instances of “bad or selective memory” happen quite often.  The courts, when they find out that assets have been hidden, take a very dim view of this.  The result is that the court usually assign costs and other fees that can be quite substantial. 

In conclusion, full financial disclosure is simply the smartest thing for both people.  It speeds up the negotiation process and lowers the costs!

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! 

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. 

https://ca.finance.yahoo.com/news/average-rrsp-balance-age-71-133000371.html?soc_src=social-sh&soc_trk=ma

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! 

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.

https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-divorcing-parents-can-struggle-to-afford-family-housing-amid-sky-high

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

References: 

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!