– The stress of a divorce, with its hearings over settlements, and custody
arrangements if there are children involved, can quickly eclipse any
thoughts of financial planning for yourself. But it’s something you
shouldn’t ignore, because you definitely have to deal with “what comes
after.” Working with a number of such clients over the years, I’ve
developed a set of basic principles to help those who find themselves in
this challenging situation cope with the financial stress. And to ensure
much-needed stability now and into the future.
Post-divorce, your financial needs will be very different from when you
were married. You’ll have to create and maintain a household budget, pay
the bills, plan for your children’s education, and manage investment and
retirement savings, all on your own. And you’ll have to do this while
coping with legacy items such as mortgages, along with any future
obligations specified by the settlement.
Working with the settlement
The settlement is only the final stage of what can be a long, arduous,
emotionally draining process of dividing up family assets. For this, you
need to get organized:
Income and expenses.
Income from employment or self-employment, a business, a trust,
investments, all should be counted. Itemize and detail all your ongoing
expenses, both short-term daily living expenses and longer-term recurring
expenses, like taxes, loan and mortgage payments.
Assets and liabilities.
Lis what you own, both jointly and individually. In addition to your
principal residence, this could also include property like a cottage or
timeshare. Same goes for investments, including funds held in Tax-Free
Savings Accounts, Registered Retirement Savings Plans, Registered Education
Savings Plans, Registered Retirement Income Funds, and any non-registered
brokerage accounts, both full-service and self-directed. As for joint or
individual debt, be sure to list mortgages, car loans and leases, lines of
credit, credit card balances, personal loans, and so on.
Most of the major events in our lives entail a fair bit of red tape.
Divorce, perhaps, comes with a bit more than usual. So make sure you find
and keep track of those key documents, especially anything that you’ve
signed separately or jointly as a contract or agreement of some sort. These
relate to ownership of real property, investments, and bank accounts, both
here and abroad. Be sure to track down originals of wills, powers of
attorney, trusts, and so on. Your lawyer will probably have much of this
paperwork. But double-check anyway. And having this information at hand
gives you a head start on the rest of the financial planning you have to
If you think doing all of this needs expertise with a spreadsheet program,
I won’t sugar coat it – it does. Some of the popular money management
software, like Quicken, might help. But unless you’re already proficient
with these, the last thing you want to do at this point in your life is get
on a learning curve. If you don’t already have one, retain the services of
a Certified Financial Planner – a professional who’s trained to consult,
advise on, and solve all types of financial problems, and who specializes
in bringing order out of financial chaos. If you’ve been using one jointly,
as is often the case with family assets, you may each want to find a new
planner – one who won’t have the inherent conflict of interest that your
current one does. Your respective lawyers will definitely need to give
Once the divorce settlement is finalized, you’ll need to work up a
financial plan independent of your former partner.
Your plan, your rules
If you’ve engaged the services of a financial planner for yourself, you
need to have a frank and open discussion about your life goals, your
values, your investment goals, and financial objectives in this new phase
of your life. You can then confidently develop an action plan that includes
these key priorities:
A clear picture of what you own and what you owe after the dust has
settled. It doesn’t matter whether you think it’s good, bad, or
indifferent, fair or unfair. It’s the reality, and it’s now time to
concentrate on how to grow from here.
Setting priorities is something you can talk through with your planner.
You’ll naturally have short-term ones, like paying the bills (e.g.,
mortgage and other debt) and everyday expenses for yourself and your
dependants. But you’ll also have longer-term goals, like retirement
planning, healthcare, estate planning, and insurance, all of which may have
been jointly held when you were married but are now solely your
To ensure you never get in “over your head” or outside your comfort zone
with your investments, your financial planner will help you create a
detailed statement of investment objectives, defining the optimal
allocation of your investment assets. And they should provide a detailed
written strategy for the investment management team they retain to manage
your assets. Continual management, monitoring, and reporting are key
functions of the financial planner.
Taxes, estate planning, insurance.
Taxes can have a major impact on disposition of assets, especially if there
are large investment accounts involved, both registered and non-registered.
It’s here you’ll really need expert help. Your lawyer, often working with
financial professionals, should ensure the tax bite is minimized in any
settlement. Afterwards, your financial planner should be able to call on
her network of professionals to make sure your family tax bill is cut to
the bone. Your planner may also refer you to the appropriate qualified
professionals to ensure that you and your dependants are protected with the
properly drafted wills, powers of attorney, an estate plan, and life
Your post-divorce objective is to get back on your feet financially.
Starting with the basics I’ve outlined here, you’ll be able to make that
happen a lot faster than you might have thought possible. – Robyn
Robyn Thompson, CFP, CIM, FCSI, is the founder of
Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management
for high net worth individuals and families. Contact her directly by
phone at 416-828-7159, or by email at
for a confidential planning consultation.
Notes and Disclaimer
© 2017 by the Fund Library. All rights reserved. Reproduction in whole or
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The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned are illustrative only and carry risk of
loss. No guarantee of investment performance is made or implied. It is not
intended to provide specific personalized advice including, without
limitation, investment, financial, legal, accounting or tax advice. Please
contact the author to discuss your particular circumstances.