In 2014, a client of mine asked me what he and his wife should not do if they wanted to build their wealth.  My immediate response was, “don’t get divorced!”  My answer was based upon what I had observed in the lives of relatives, friends and clients who had experienced divorce firsthand.

This blog is not about the sad stories that lead up to the dissolution of a marriage.  This story is designed to share information about the process to get to divorce once the decision to divorce has been made.  It is very rare for a divorce to be truly amicable because the decision to marry in the first place was made with the vow, “till death do us part”.  The emotion of the decision to split often carries over to the practical aspects of dividing up money, retirement funds, the marital home, pensions, the family business, and time with children.  Another practical consideration that enters the debate is spousal support. 

For many couples that get married young, their wealth was probably negligible.  As time marches on, the combined accumulation of wealth can be quite impressive for some and perhaps not so in other cases.  Regardless of the amount of wealth acquired, the legal process for all divorces in Canada is generally the same.

In 1697, William Congreve wrote a play called the “The Mourning Bride”.  The famous line, “Heaven has no rage like love to hatred turned, nor hell has no fury like a woman scorned”, speaks to the rage a man or a woman can show when profoundly hurt or disappointed by someone they love or care for.  Most of us have witnessed divorce battles rage, sometimes for over a dozen years, for reasons that only make sense to the battling couple.  The battle is not for restitution, but for other reasons unfathomable.

The financial costs often go into the tens of thousands of dollars, and not uncommonly into hundreds of thousands of dollars in legal fees alone.  The psychic and physical toll on the combatants is incalculable.

In Canada, there are three categories for divorce to be granted:  1) fighting over money or property, 2) adultery and 3) cruelty and violence.  Once it is determined that a divorce will proceed, the concept of “No fault” comes into play.  This is important because once it is determined that the marriage is over, two legal jurisdictions come into play for the divorce to go into effect.  The federal laws that govern The Marriage Act take over for the questions of support, for both child and spouse.  The provincial laws govern the division of property.   

The topic of divorce is complicated and emotionally charged.  According to Stats Canada, just over 50% of all marriages end in divorce, with the average length of marriage before divorce is 8 years.  When we calculate common-law relationships into the mix, the split up of relationships goes up significantly and the average length of co-habitation goes down substantially.

This relational malady is incredibly costly for families and our communities.  My new service as a Chartered Financial Divorce Specialist, is to provide a complimentary service to those provided by the Family Councillors and the Family Law Specialists.  My job is to dispassionately calculate the division of assets in a variety of ways.  My hope is that these financial options will help the divorcing couple create the framework for a good divorce settlement saving all concerned time and money.

Today’s blog is taken from the book “Business Secrets From The Bible”.  The author, Rabbi Daniel Lapin, published this book in 2014.  I am quoting from pages 243 to 245 from Chapter 35, “How you Feel About Yourself is How Others Will See You.” 

I have witnessed that many people are not comfortable within their own skin, especially when it comes their relationship with money.  I hope that today’s blog will be of value to you and those in your life.

“In the musical West Side Story, there is a scene in which the character Maria sings a song that goes like this: “I feel pretty, oh so pretty.  I feel pretty and witty and bright.  And I pity any girl who isn’t me tonight.”  I rather like these lyrics because Maria highlights the principle behind this biblical business secret.  She knows that she looks great because she feels pretty.  Most people can relate to feeling this way at times.  Maybe you have had the experience of your spouse telling you that you look beautiful or handsome, only you don’t really feel that way at the time.  Maybe you are self-conscious about the outfit you are wearing.  Or maybe you feel like your hairdresser or barber gave you a bad haircut the last time you went in.  When we don’t feel attractive, there is nothing our spouse or friends can say to change the way we feel.  The thing of note here is that this feeling is not entirely delusional – it is not necessarily just poor self esteem.  We may, in fact, be right.  This is because thinking you look bad is a self-fulfilling prophecy.  Maria looks pretty in West Side Story because she feels pretty.  If she felt unattractive, others would see that she was glum or unconfident and would probably find her less attractive, too.”

The principle that the Rabbi is presenting is that “to succeed in business and in life, you must not only be a good and moral person, you must also hold a strong and confident conviction that you are.  If you can engender a deep conviction that you are noble, generous, and kind and that making money is not shameful – it speaks to the highest of morals and is something to be proud of.”  “If you feel a sense of harmony with yourself, with God, with the world, and with money, people will see and feel this.

Many people look forward to their retirement days with much anticipation.  They have hopes and dreams of visiting the grandchildren, downsizing the house and holidays in warmer climates.  After many years of hard work, these are all things to look forward to and appreciate.

For those of us who have the retirement badge of honor, the bliss of retirement can get tiresome.  It is my observation that many men, as opposed to women, have more difficulty with the concept of retirement, especially after the first year or two. 

It is perhaps better to look at one’s senior years as a time of transition as opposed to retirement.  I have read the Bible five times in the last 6 years and have never seen any word or phrase that mentions the “R” word.  In conversations with people that are familiar with other religions and worldviews, such as Islam, Buddhism, Hinduism and Judaism, there is also no word for retirement. 

So, what should one do with this dilemma?  It is perhaps best to use the phase, “what can I do to be of service to my family and friends in my community?”  This question gives you permission to get into a “side hustle” where you can be useful in the marketplace. 

People who have a sense of purpose are simply more content and happier than those who spend their time twiddling their thumbs.  If you can earn some money, even better!  When inflation is running at over 12%, why not earn some extra money to make up the difference lost to the increased cost of living?

Attached is a link from Tim Cestnick of the “Globe and Mail”.  I hope you find this of value! 

When I was in business, I used the services of two different business coaches.  My first coach, Peter Neufeldt of Peak Performance Consulting (www.peakperformanceconsulting.ca)  provided me insight about my self-limiting beliefs. His services helped me to think differently about what might be possible in my business life.

Many of the concepts and ideas that I had early in my business were mostly good but lacked refinement and sophistication.  Peter’s guidance helped me to grow my business because my confidence in myself and my services, grew significantly.

My second coach, Russell Schmidt from the business coaching organization, The Strategic Coach (https://now.strategiccoach.com) was also excellent.  This program was different from Peter’s, in that we met as a cohort of around 25 to 30 other entrepreneurs every 90 days.  We got the benefit of Russ’s wisdom along with the business experience of all the other business owners.  Some of us were relatively small businesses whereas others were much larger with several hundred employees. 

The journey that I went through with the two coaching programs was very beneficial for me, my employees, and my customers.  For me, the main benefit was increased confidence in myself and my processes.  My employees benefitted through increased job security because I learned to delegate work to them so that I could keep doing what the good Lord gifted me with.  This resulted in more and better business resulting in more profits!  The customers benefitted because they had a team of competent people that could solve problems with energy and creativity.

The other morning at our weekly Rotary meeting, my friend, Roger Brown shared these words of wisdom called “Credibility Habits”.  These four points were provided by both of my coaches.  Thanks to Peter, Russell and Roger for sharing these words of wisdom from the Unknown Author!

Confidence About Credibility

No one gets taken seriously in this world

Unless he or she has credibility.

Not credibility about brilliant ideas or heroic deeds

But credibility about daily habits and performance.

The 4 Credibility Habits are:

1.  Show up on time.
2. Do what you say you are going to do.
3. Finish what you start. 
4. Say Please and Thank You!

These simple habits may seem self evident but are rarely done consistently.  By implementing these 4 habits, your personal and business lives will improve significantly!

I have been working toward getting another designation to complement my Certified Financial Planner (CFP) credentials.  This next designation will allow me to work with people struggling through separation and divorce.  Once I complete my Certified Financial Divorce Specialist designation, my business services will be broadened.

I came across an interesting article in a recent edition of the Financial Post.  While trying to save money is always good, it can be dangerous to create a “kitchen table deal”, especially when negotiating complex details.  Click on the attachment and hopefully you will gain some benefit.

https://financialpost.com/personal-finance/kitchen-table-separation-agreements-binding-right-circumstances

Best wishes and keep smiling!

A

I recently came across an interesting article in the Financial Post that illuminated some truths that lie behind common wisdom.  The adage, “if it seems to be good to be true in appearance, it probably is to good to be true in reality.”  My advice, in today’s blog, is to be a lifelong learner.  Common marketplace wisdom is often good, but in the words attributed to Ronald Reagan, the 40^th President of the United States, it is good to “Trust but Verify”.  President Reagan was taught the phrase by a Russian historian, Suzzanne Massie.  Ms. Massie, a consultant to the President, explained it this way: “Doveryai, no proveryai” or “trust but verify” is a Russian proverb that means that a responsible person always verifies everything before committing themselves to a common business with anyone, even if the other party seems completely trustworthy.  In the Bible, Acts 17: 10-12, there was a group of Christians from the city of Beroea, that “examined the Scriptures daily to see if the things that Paul and Silas preached were true”.  The Berean Christians understood that their futures depended upon believing and acting on the information being provided by the early church leaders because they knew there were many “wolves in sheep’s clothing”.

There are many people that offer advice and guidance in the market place every day.  I have attached this article, by Jason Heath, from the May 26 edition of the Financial Post to give you pause to 4 common myths that thrive in the Canadian marketplace.  If you don’t believe me, just read them!

https://financialpost.com/personal-finance/big-money-myths-cost-you

Best wishes for a terrific week!

Al

Over my 30 years as a Certified Financial Planner, many people asked me what type of behavioral things people can make that will make a big difference to one’s financial future.  Today’s blog features a real story about how a nasty divorce has a very bad outcome for everyone concerned, except for the legal types and the inevitable personal counselors!

What to avoid in a divorce to prevent financial harm

MARIYA POSTELNYAK

PUBLISHED APRIL 30, 2023UPDATED MAY 1, 2023

The tone of divorce proceedings runs the gamut from cordial to downright cruel. But while feelings of anger are common, attempts to inflict financial harm on a spouse will backfire – and can prove very costly for those who try, lawyers say.

“People will sometimes fail to disclose assets, they’ll try to hide them and play games with the value, or they’ll hide money offshore,” says Andrew Feldstein, a lawyer at Feldstein Family Law Group. “T

here’s always an element of power and control that takes place between former spouses and finances is the element that bleeds into power.”

In April, a couple in Australia made the news for finalizing their 11-year-long divorce after both spouses consistently refused to provide a complete picture of their finances. And there’s no shortage of infamously difficult divorces in Canada. Take the case of Bruce McConville, an Ottawa man who claimed he burned about $1-million in savings to avoid giving it to his spouse amid divorce proceedings.

Lawyers say cases where a spouse hides or diverts funds are far from uncommon. “I have a case right now where the opposing side earns an income of close to $300k, and on review of financials it was uncovered that he hasn’t been depositing the entirety of his pay into joint funds,” says Laura Paris, associate lawyer at Shulman & Partners LLP. “We’ve been unable to trace where the funds could be.”

Ms. Paris cautions against using such questionable methods. “When there’s no viable reason that the money is being transferred, the court will err on the side of assuming that it was being done for precarious purposes,” Ms. Paris says. Under such circumstances, it would be justified to make a claim for an unequal division of family property, she says.

Why some couples stay married for the benefits

And when a spouse is found to be hiding or deceiving the court about their finances, they’ll end up on the hook for the person’s costs and for the cost of the proceedings, Ms. Paris says. In one case she had, there was a 17-day trial and it was not until representatives from the bank provided statements that she found over $1.5-million that was never disclosed over five years of litigation. Ms. Paris won the case and her client’s spouse was ordered to pay over $400,000 in costs, including her client’s legal fees.

Despite the risks, some spouses will ask lawyers for help in inflicting financial damage on their partners. That’s come up for Ms. Paris, who says she avoids such cases. “If clients are asking us to deliberately try and hide money or advise us that their intention is to hide money or avoid their obligations, pursuant to our code, those are not clients we should take on.”

In Canada, couples seeking a divorce are legally required to disclose their financial assets. “Under the Family Law Act, you have to provide a financial statement whenever you start a court application that deals with property,” Mr. Feldstein says.

In Mantella v. Mantella, the court ordered a husband to pay more than $2,000 every day after he failed to disclose finances in a bitter divorce battle. “Ultimately, that fine got to six figures,” Mr. Feldstein says. “When you play these games of what I call, ‘Catch me if you can,’ things become long and expensive.”

Judges can also penalize parties for what they see as egregious behaviour. “If one or both parties are trying to attack one another, adverse inferences can be drawn against people in litigation,” says Zack Liquornik of Liquornik Family Law.

The verdict: acting out of spite will not be in anyone’s best interest. “As far as money issues go, both parties need to be honest,” Mr. Liquornik says. Being transparent about finances will not only help litigants avoid being penalized in court, it will also ensure that cases don’t drag out longer than they need to.

My last blog spoke to the actuarial probability of living a long life.  It is often assumed that with long life is excellent health.   Recently, I attended a funeral for a dear friend who passed away at age 92.  She had a long life, but she suffered with a variety of ailments including osteoarthritis, high blood pressure and for the last 10 years, the creeping in of dementia.  This morning, at another community event, I visited with another elderly friend, who at age 81, was on the wait list for a knee replacement.  His wife was in care with Alzheimer’s disease.  A relative of mine commented recently that having one’s cataracts removed is now considered a “badge of honor” because it speaks to one’s longevity!

Frank Vettese, former chief actuary of Morneau Shepell, wrote 2 articles in the Globe and Mail (April 4 and April 11, 2023), that focused on the probably of contracting a serious or critical illness.  For the purposes of definition, there are 14 classifications of these illness’s listed in the Canadian Pensioner’s Mortality (CPM) Table.  The major critical illnesses are heart attacks, life-threatening cancers, stroke, and Alzheimer’s disease.   

Of 1,000 women aged 65:

173 or 17% will still be alive and in good health at 90.

357 or 36% will have a critical illness at age 90.

9 or 0.90% will make it to 100 without contracting a critical illness.

Of 1,000 men aged 65:

500 +/- will survive until age 90.

961 or 96% will have contracted a critical illness or serious illness by age 90.

100% of all men alive at age 100 will have suffered a critical illness.

 In a conversation with Rhiannon Tutty, Sun Life advisor in Invermere, B.C., she commented that 80% of the claims that she has dealt with were due to heart attack, stroke, life threatening cancer and bypass surgery.  For a complete list of illnesses covered, please reach out to your life insurance agent, or contact Rhiannon Tutty at [email protected].

Here is list of most illnesses covered by most insurers.  They include life threatening cancers, stroke, coronary bypass surgery, dementia/Alzheimer disease, multiple sclerosis, kidney failure, Parkinson’s disease, paralysis, major organ transplant, bacterial meningitis, coma, heart valve replacement/repair, deafness, and motor neuron disease.

So, what should we do with information?  It has been my observation that it is very expensive to get and stay sick.  Be prudent in your retirement planning to have a “health account” as part of your planning.  Also, many financial planners offer Long Term Care Insurance and Critical Illness Insurance as part of their offering.  The premiums for these plans are quite reasonable if you are under age 60 and healthy.  Pre-existing conditions like diabetes, high blood pressure and smoking will be taken into consideration when applying for these types of coverages, but when one considers the probability of a claim, before age 90, wise people should at least investigate this type of coverage. 

Recently, I have been studying a course that featured a discussion on the probability of how long people, within a group, can expect to live.  Often these conversations are misconstrued as to when a person will pass away which, if taken seriously, may result in bad decisions being made.

Life expectancy depends on many factors, including gender, income, diet, geography, and general health to name but four issues that can impact longevity.*  No one knows how long any specific person will live, but if you have a large enough group, patterns will emerge.

According to the Canadian Mortality rates, published in the “Canadian Pensioners” Mortality 2014 table with improvement to 2023” show the following:

Of 1,000 women living at age 65, we can expect 929 still living 10 years later. 

By age 90, more than half are still alive.

The last survivor is expected to die between 109 and 115.

Of 1,000 men living at age 65, we can expect 918 can expect to still be around at age 75.

By age 89, just over 500 men will still be alive.

The last survivor is expected to pass away between 108 and 110.

So, what does this mean?  When we compare these current mortality rates with those when the present Canadian system was first created, Canadian men and women are now living much longer.  Consider this:  most people enter the work force between 20 and 30.  If they retire at the present standard age of 65, it is highly probable that Canadians will spend more time consuming their investments and savings rather than accumulating wealth.   That is a recipe for becoming poor when one’s health becomes most fragile.

In conclusion, my recommendation is for people to challenge the concept that retirement will be the “golden years”.  As a self-employed person, I am presently retraining myself to continue being valuable in the marketplace.  I will be announcing my new specialty in the weeks to come.  Stay tuned!

*Frank Vettese, Special to The Globe and Mail 13-03-2023 and 15-03-2023.

*Ed Burrows, FCA, President of Pension Valuators of Canada, Video Lecture on Basics of Pension Division for the Chartered Financial Divorce Specialist Designation course, January 2023.

From time to time, Rob Carrick of the Globe and Mail, posts something interesting and worth while.  We have all witnessed the steady rise of interest rates over the past year.  For those with debt, there are now extra challenges because of increased costs.  For those with savings, there is higher no-risk returns.

I am posting Mr. Carrick’s article below.  It is a pretty good read and I have made some comments at the bottom of the blog.

The emphasis when reporting on high interest rates is usually put on borrowers rather than savers, and that’s a correct approach.

The financial burden of higher mortgage, line of credit and loan payments is felt more deeply than the lift people get when their savings accounts and guaranteed investment certificates pay more. Who among us can absorb hundreds of dollars in extra borrowing costs per month and not have to make painful adjustments?

In a recent Carrick on Money survey, just over 50 per cent of the 2,148 participants described the impact of higher rates as catastrophic, harsh but manageable or mildly negative. Seventeen per cent said high rates had a neutral effect on their finances, while 31 per cent said high rates had either a mildly positive or quite good effect.

THE GLOBE AND MAIL

The survey results highlight the two-pronged effect of higher rates. Some people suffer, others see a windfall.

About 22 per cent of survey participants said they were missing out on high rates because they have nothing left to save. Forty-six per cent said they’re able to save at least a little, and 32 per cent said they’re saving lots. Three in 10 said further rate hikes would be a win for them because it would mean higher returns on savings, while 40 per cent said higher rates would be a setback or disaster. The rest said higher rates would have little to no impact.

Comments from survey participants with debts attest to the pain of rising rates for borrowers. Here’s a sample:

• We have literally nothing left to put food on our plate forget savings or buying even new clothes for our family.
• My small business loan has gone from 6 per cent to 9.25 pert cent. I am currently seeking out angel lenders who can lend me at 5 per cent so I can save on interest costs.
• HELOC [home equity line of credit] interest costs are squeezing monthly budget.
• Feeling the full brunt of increased rates. Any more increases will result in some very difficult decisions. May also need a significant increase in pay to maintain existing lifestyle and debt load.
• [Use of a] HELOC for a renovation could mean an additional year of work before retiring.

In previous blogs and Facebook posts, we have discussed the merits of being free of consumer debt.  If you are still in debt, consider a “side hustle”  to eliminate the burden.  We cannot predict the future, however, it seems clear that interest rates are going to continue to go up.  For those of you without debt, you are going to be getting a raise that you did not have to work for.

Have a great week!