Dividing Assets During Divorce
A couple of weeks ago, we talked about how to financially prepare for divorce. Facing the topic head-on, while it’s a tough row to hoe, knowing you’re not alone can help. According to Stats Canada, 43% of marriages end in divorce before the 50th anniversary. Reading that, you may think “Who would divorce after being married that long?”. The answer is anyone. Life affects everyone and when you share your life with someone, it affects them too. While knowing this doesn’t make preparing for the emotional impact of divorce any easier, planning your financial decisions ahead of time can put you in a better position to move forward. In life, moving on is the key to moving forward.
Divorce is based on division – a division of marriage and division of assets. From a legal standpoint, it is assumed each spouse contributed to the marriage financially. That means each party is entitled to a portion of the marital assets, regardless of who paid for them. The amount that is eligible is the hardest part to determine, along with what is fair and equitable. Those two terms don’t always go hand in hand and are generally debated by the involved parties. While a 50/50 split seems like the easiest way to go, easiest is not always logical. The history of each party coming into the marriage as well as during the marriage plays a big part in the division of assets. For example, if one person brought higher asset level into the marriage such as a home or inheritance. As that belonged to them prior to the marriage, does it seem fair and equitable for them to lose 50% of it? Then there is the age old situation of child care. Historically the wife has stayed home with the children while the husband has focused on his career. Those days are changing, so gender no longer plays an integral part in this decision. It’s now focused on the financial future of each party. Finalizing the division of assets requires negotiation and hopefully both parties are reasonable about it. Going into the negotiations, it’s important to know what your long-term interests are. Would you rather have an investment portfolio or a house? An outside perspective can help determine this for you. That is where your financial planner can help. They can look at your full portfolio of assets and walk you through the process of establishing your goals. If you’re about to go through or are going through a divorce, contact us, we’d be happy to help. Be sure to come back in a couple of weeks to read about how to deal with debts and how that is handled with divorce.