(April 2009)
So you’ve decided that you can’t work things out and it’s time to separate. The end of marriage may be viewed as a tragic event. Separation and divorce can be a difficult process both emotionally and financially. One of the first things you want to establish is a separation agreement. Your agreement becomes a legally binding contract once it is signed and witnessed by both parties. Among other things it outlines items such as spousal support, the division of property and debts, and provides for custody, visitation and support of children.
Where do you start? There are essentially four ways one can approach this situation. Hopefully you are still talking to your soon-to-be former spouse. This can lead to an amicable negotiated separation and a clean break from each other. If both parties see eye-to-eye they can draft their own agreement and take it to their respective lawyers for review. This ensures all legal aspects are covered. As long as there are no outstanding issues, you have an agreement.
If you’re still talking but just can’t seem to come up with an agreement, the next option may be the mediation approach. Mediators are objective participants who don’t take sides but try to work with both parties equally. They may provide guidance or refer other professionals for specialized areas such as the development of a parenting plan or financial planning calculations. Many mediators are also lawyers and provide their services from a legal point of view.
The third method is a process called the collaborative approach. In this case both parties retain their respective legal counsel and everyone meets together. There is a pledge not to go to court. Both parties exchange information honestly, and a solution is developed that takes into account the highest priorities of both parties and their children. The goal is to reach an agreement that everyone can live with.
Finally, the traditional method is the litigation process. Here each party retains their respective lawyers and all discussion is handled through their legal counsel. All communication between the spouses has ended. This process can be quite costly, time consuming, and can end with multiple court appearances.
One method is not necessarily better than the other. Despite the method chosen to draft your agreement, ultimately many of the issues of separation and divorce will revolve around finances and money. An exactly equal division of property is often not the same as a fair division of property. Sometimes a specially trained financial planner is required to assist with the complicated calculations needed in evaluating the division scenarios to ensure that financial decisions made today will not result in costly mistakes in the future.
During this emotional life transition it is important to know that there are many support services available to help with your agreement. Your team may include mental health professionals, child specialists, financial specialists and legal professionals. Your team will help to rebuild your foundation toward a happier and healthier life for the future.
This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of FundEX Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.