How will your Retirement be affected by a Divorce?


There is a rising trend in Divorce after 50. Ending a marriage is one of the largest life events that can happen in a person’s life. You may have tried to make things work, but now it’s clear, the marriage is over. What do you do next? How do you ensure you will be OK financially? How will this affect your retirement plans? Knowing your options and how the Divorce will affect you is key. The first steps are:

  1. Gather financial documents and know your financial picture.

Make sure you know where all your financial and legal documents are, including pension statements. Having important documents on hand in the divorce process means you avoid time and expense trying to get copies of them later. Know what assets are shared and which are exempt.  

Did you know if you inherit money or receive a gift during the marriage (in most provinces) as long as it is kept in a separate account it does not have to be shared in a divorce. Once it is used to pay down the mortgage on a family home or put in a joint account, it will be considered the property of both spouses.

  1. Assess your credit.

Request a copy of your credit report, and correct any misinformation it contains. Good credit is the foundation of your financial future, so watch it carefully! Without credit it can be near impossible to obtain loans for any purpose, or even to manage the expenses of running your household.

  1. Open accounts in your own name.

You will need your own bank accounts and credit cards. It is not too soon to set these up. Use a different bank than where you currently have joint accounts, and open both savings and checking accounts in your name alone.

  1. Assemble a professional divorce team.

Today, financial portfolios –and the regulations that govern them –are much more complex, and you may need multiple layer of professional help to navigate all the legal and financial details.

  1. Be watchful.

No matter how much you may think you know someone, it is still very common for assets and/or income during divorce to be hidden –even though that’s underhanded, unethical and illegal.

It is common for one person to know more about the family finances than the other and one may not know the extent of their debts.

Resolve to get the help you need to start down the path toward your secure financial future.

For couples over 50 divorcing, generally the 2 largest assets are the house and pension. Splitting assets 50/50 may not result in the same financial picture now that is does in retirement. The goal is for both parties to come out equally and to keep income steady, so that retirement lifestyle is not negatively impacted by a divorce.

Knowing how your pension and your future monthly retirement income is affected by different asset splitting options is important. There are many ways to legally divide assets, to ensure both current and future financial needs are met.

It is a good idea to consult a financial professional as well as a lawyer if you are going through a divorce.

Your lawyer will focus on the legal issues and a planner can provide you a summary of the short, medium and long term implications of the proposed division of assets, including tax implications.

Additionally common-law relationships come with their own set of rules.

A CDFA – Certified Divorce Financial Analyst can assist you in getting the help you need to start down the path toward your secure financial future, giving you a better understanding of your financial situation.

Contact Heather for a no obligation review of your financial situation.

Lorne Zeiler
Written By:
Heather Holjivac
Senior Wealth Advisor

Keeping Your Piece of the Pie


11597904_sHow in your divorce you can wind up losing one of your most important investments?

For most people in Ontario their home represents one of their largest and most important investments, yet most people might be surprised how the law treats the home on marriage breakdown.

When a couple separates, their net family property (the increase in all of their assets, less their accumulated liabilities, after assets and liabilities brought into the marriage are first taken out by them) is shared equally between them.  The spouse holding the greater amount of net family property makes an “equalization payment” to the other spouse so they end up with an equal share of the pie.

However, the matrimonial home has special status.  While it might seem sensible that a spouse who paid in full for the matrimonial home and brought it into the marriage should end up with their investment back at the end of the day (as is the case with other assets brought in, above), think again!

Under the Family Law Act, it does not matter if a spouse independently purchased the home prior to the date of marriage, or made a significantly larger contribution to the acquisition of the matrimonial home before or after marriage (regardless of the source of funds, even inheritances or gifts).  Once both parties reside in the home as the primary family residence, the law provides that the value of the matrimonial home be shared equally between the parties if the marriage ends.

The current state of the law creates a serious risk of a highly inequitable result.  Consider this example:

Before Jack and Jill married, each had $300,000 in the bank.  Following the marriage, Jack used his $300,000 to purchase a home for the family. Jack and Jill later divorce.  While the law permits Jill to exclude from equalization the value of her pre-marriage bank account, Jack is required to equally share the value of the matrimonial home with Jill.   Even though Jack came into the marriage with the same amount of assets as Jill, since it was used to acquire the matrimonial home he cannot recover the full amount.

The law provides for an exception to this.  If a spouse brings a home into the marriage that becomes the matrimonial home, but it is subsequently sold, that spouse’s equity in the original home will then be exempt from equalization (in other words, that person gets to take that amount out first).

Clearly, none of this makes sense. Yet that is the state of the law. So what does this mean for you?  If you are the one who brings the home into the marriage, you should try and get it sold and buy another house for the family to live in.  But if you are the spouse who did not bring it in, you want to stay in it! Family lawyers in Ontario have been pushing for years to change this nonsensical provision of the Family Law Act.

Marriage and cohabitation agreements can sometimes assist to restrict the effect of the Family Law Act over your assets, but there are still some limits with respect to the matrimonial home.

If you are uncertain of your situation or have questions, you should contact an experienced family lawyer.  Being proactive to ensure you keep your fair share of the pie is always a good idea, in the event the unthinkable comes to pass.

Article compliments of Stephen Durbin Professional Corporation. For information contact