Financial Calculations can be Illuminating
In a recent case, a common law couple decided to separate after 9 years of co-habitation. The couple who fell in love, in spite of their different world views, found that they no longer loved each other because of those same world views.
One of the differences in world view was how money was to be earned and spent. The man who said that he earned less than he made, spent money on “potential business opportunities.” These opportunities, which did not come to fruition, resulted in growing credit card debt, unpaid mortgage payments and a line of credit that continued to grow.
The couple engaged me to help them to help them determine two things. The first calculations were to determine how to best execute the 50/50 split of assets and the second calculation was to determine the value of how much child and spousal support would need to be paid.
When couples separate and divorce, it is vital that there is full disclosure of all property, debts, and income. The lady in this case, shared her information by presenting up to date statements from different financial institutions, including income tax. The partner, on the other hand, sent an email with estimates.
When the partner decided to share his past 3 years of income tax statements, it was illuminating for the former partner as he had been understating his income up until then. The man had only shown his T4 income to his wife, while withholding the information about his professional corporation.
When we calculated the child and spousal support properly difference in support payments was incredibly significant.
What is the lesson in this case? Proper disclosure of assets, debts and income will help to get an amicable settlement. The adage from an ancient book of wisdom, “your sins will find you out”, is actually true. The good news here was that the man who had “forgot” disclosing his professional income initially but later shared when he “remembered” to share his professional corporation’s income with us, saved both him and her a lot of time and probably, significant and unnecessary legal bills.