Getting a divorce is no easy matter! It can be quite traumatizing while simultaneously putting a strain on your finances. When faced with such situations we often seek assistance from people who may be unaware of actualities and console you with information that isn’t accurate.
Misinformation causes some of the most common mistakes that people make. As most of these myths involve financial aspects of a divorce, they could have an adverse impact on your financial life in the future and the present as well.
While every situation is different, misconceptions are similar. Hence, here are a few myths that we’ve debunked to help you ensure your divorce doesn’t decimate your finances.
Myth 1: Only family law lawyers can help clients understand the implications of their financial settlement.
This myth exists because this has been the way it has been done. However, a lawyer’s expertise is the law, not finances. A Certified Divorce Financial Analyst or Chartered Financial Divorce Specialist has a financial background and also has specific training in the nuances of finances during a divorce. Your Divorce Financial Professional can prepare financial statements and projections that show the long-term effects of proposed settlement offers. Your settlement will determine your standard of living for many years to come. It’s simple, hire a lawyer to provide legal advice and a financial professional to provide financial guidance.
Myth 2: What’s mine is mine and what’s yours is yours.
Often couples keep ‘separate money’ during their marriage. Sometimes this happens as each spouse wishes to maintain their autonomy, or one spouse is financially irresponsible. However, this does not mean it is separate property when it comes to divorce. All assets acquired from income earned during the marriage are marital property. If one spouse has savings from their income, then that is also an asset of the marriage.
‘Separate property’ is anything that was gifted or inherited during the marriage, or brought into the marriage and left in the spouse’s separate name. As long as it is kept separate and not co-mingled with marital assets, it will remain separate property.
If those assets become co-mingled, they are considered to be gifted to the marriage and are no longer separate property.
Myth 3: A 50/50 division of property is always fair.
All assets are not created equal. This mistake is often made as people neglect to consider the ultimate financial outcome of owning a particular asset. RRSPs and pensions have an income tax consequence. Homes have a selling cost, and housing markets can fluctuate. Trading off pension assets to keep the family home may have serious long-term effects on your ability to retire.
The best way to understand your settlement is to work with a Divorce Financial Professional who can project the short and long-term impact.
During a divorce, you end up making some of the biggest financial decisions of your life. Due to the complicated financial intricacies of divorce, it’s always best to seek advice from the best and most knowledgeable people out there. And this is exactly why Empowered Divorce Solutions is there to guide you.
We will help you understand how the combination of income, property division, and spousal and child support will affect you post-divorce. For a complete list of our services, please click here. If you have any questions about Empowered Divorce Solutions, we’d love to hear from you. Contact us here.