Here’s a link to an article that Marian Gage, Family Law Lawyer, and Kathryn Jankowski, Financial Divorce Specialist contributed to in Yahoo Finance!
http://ca.finance.yahoo.com/blogs/pay-day-/financial-planning-second-marriage-182821020.html
Enjoy!
If you are going through the divorce process the first thought after reading the title of my blog is “Never Again!” right? I know it was for me and, in some ways, it’s true what they say, “You don’t know your spouse until you divorce them!!” Some divorcees move forward, embracing their independence. I know I painted my bedroom pink…because I could! But all that new freedom aside, it tends to be a couples world. It’s also nice to share moments in your life with someone special so, for me, I recanted my “Never Again” and did it a second time.
Now it gets complicated, for sure. We each had our children with our first spouses so there’s that to consider. So, if my husband and I owned our home jointly then if I died my half would revert to him. My husband could then go out an find a new mate and enjoy all the fruits of my labour with his new spouse. My kids? They would get nothing. See how this works? So what can you do to help prevent your dying wishes from going awry? Consider the following:
1) A prenuptial agreement. Some say it make a business out of a loving relationship but I think just the opposite. It protects each of your family’s wishes, their kids and yours, and sets the stage for a well thought out transition of wealth plan that is, hopefully, agreeable to both of you. This may stop future feuding once the initial feelings of love and relationship newness wear off and you start to feel that, perhaps, the relationship is a little unfair, leading to potential resentment and chaos.
2) Own your home as tenants in common, rather than joint tenants, based on a percentage of what each of you put into the equity of the home. I think, though, in terms of fairness, anything you both work on together, while married should be split 50/50. I believe family law would support this as well. Keep in mind that if your wealth is so lop-sided that, if you pass away, your spouse would be homeless, that might cause an issue. There are financial solutions available such as purchasing a life insurance policy to offset any deficiencies in providing reasonable housing for the surviving spouse.
3) Did you know that when you say, “I do”, “I will” or whatever acknowledgement of entering a marriage contract is deemed appropriate for you, that your Will is null and void? Yes, you have to renew your Will. Funny thing is, I tried to renew my Will just days before my wedding and I couldn’t do it. Not really but sort of….I had a temporary Will that stating…”In anticipation of marriage I intend my new Will to state…..” and then we formally re-did it when I returned from my honeymoon. Needless to say, I avoided that sky-jumping opportunity, on my honeymoon, when it presented itself.
4) Check the beneficiaries of your registered plans. Remember that RRSP’s and the like, transfer to a spouse tax-free on first death but they are taxed to anyone else you many want to bequeath…such as your children. Lastly, on this note, depending on how your Will is written, if you leave your RRSP assets to your children your Estate pays the tax which could be as high as 46.41%, or roughly half, and the kids get the full value of the RRSP.
I advocate that a well-thought out plan can save many years of potential resentment and put you both on a fair playing field right from the get-go….so you can enjoy the feeling of being protected, financially, for you and future generations.
My advice? Have a well thought out plan before you stroll down the isle. It may save years of grief if you don’t…and it will set you on a good path to enjoy your new marriage.
By Kathryn Jankowski, B.A., CFP, FDS, FCSI
Chances are, if you are reading this post, you, or a close friend or relative, is going through the divorce process. Overwhelming ranges of emotions and lack of clarity may be prevalent but add to this the need for the accumulation of all your financial documentation …all this can add to the stress of it all.
So what do you need to provide to your lawyer or mediator? Here’s the list:
1) The last 3 years of tax returns. Not only that but your Notice of Assessment as well. Just because you disclose what you thought CRA wanted to know it doesn’t mean your return was assessed as filed. There may have been some discrepancies as to what CRA has and what you filed.
2) Pay stubs for the most recent pay periods. If you get paid bi-weekly then a month’s worth of pay stubs will ensure that all your employer-based savings plans and other employment-related fees are all captured.
3) Bank Statements. Some of the bank statement could be in your name, the name of you and your spouse or in a business name. All that needs to be disclosed as well.
4) Brokerage Statements. Or any investment related statements including taxable accounts, Tax-Free Savings Accounts and any registered plans such as Registered Retirement Savings Accounts and Registered Educational Savings Plans.
5) Credit Card Statements. This would include Visa, Mastercard as well as any lines of credit. Also, if you have lines of credit are they secured lines or unsecured?
6) Statements from pension plans, profit sharing retirement plans, employee share purchase programs and any other employer-driven savings plans. If you were employed by the same employer before the marriage you might want to seek out what the value of these savings plans were before the nuptials as well.
7) Real Estate valuations. I strongly recommend getting an appraiser to do this job. Not a real estate agent, an appraiser. This valuation would be for the principle residence as well as any recreational properties or investment properties.
8) Mortgage Statements. Term. Amortization. Mortgage rate.
9) Insurance. Both health insurance, even if it is covered by your employer, and life insurance, whether it be a group benefit through an employer or your own personally owned plan.
10) Business Interests. If you own your own business all the details of your business must be disclosed such as tax filings (if they are filed separately from your own return) and audited business statements. Typically, business valuators have to come in to do an assessment as to the value of the business.
I would advise that you get all this together even before you go see a lawyer…to save time and, potentially, some legal fees. Keep in mind, too, that there are other experts out there that can help with the disclosure documents….such as a Financial Divorce Specialist.
By Kathryn Jankowski
Statistics Canada released new 2012 data stating that 40% of all marriages end in divorce. With such a high percentage (albeit in a decline in recent years) why is divorce still a taboo, personal matter? Well, other than slinging the ‘he-did’, ‘she-did’, shame-blame personal stories that get flogged it appears that our own transitions are regarded as personal whereas some love to hear the gossip of what happens behind others closed doors. Let’s have a look at Tori Spelling and the recent Star Magazine cover stating that her and 46-year old hubby are going splitsville. Tabloids, hungry for buyers who are, in turn, hungry for gossip know that this stuff sells!
Tori Spelling retorts in her blog and the Star Magazine releases her story that the claims are false ( http://www.star-magazine.co.uk/posts/view/47253/Tori-Spelling-angry-as-false-divorce-reports-upset-son/ ) but like all gossip….it’s been said, right?
So, since this is a blog relating to collaborative divorce then what’s the tie-in you might ask? Collaborative divorces are completely private. No one can request court records or negotiation materials which are open to the public…because there aren’t any. Robin Williams knew this when he went through the collaborative process just a few short years ago. No mud-slinging!!…and no one knows what the settlement was between him and his wife. If you know of someone who might be wanting some privacy during their divorce proceedings you might want to look at the collaborative process.
Kathryn Jankowski, B.A., CFP, FMA, FDS, FCSI
Vice President and Financial Divorce Specialist
T.E.Wealth
710-26 Wellington Street E.
Toronto, ON
M5E 2S3
416-640-8591
Kathryn Jankowski
By Kathryn Jankowski
People of all ages divorce but there seems to be a rise in the percentage of people who are divorcing later in life. Why does that matter? The one very profound fact is that when you are left with half of your wealth it may not be enough to support the retirement lifestyle that you’ve worked so many years to accomplish. With half of the retirement income gone to support your spouses income needs, ‘gray’ divorcees may have to look for other alternatives for income such as going back to work or taking in a boarder to two.
‘Gray’ divorcees have less time to recover financially so their financial needs become a big motivating factor in their life. Because they realize that living with someone is less costly than living alone they may be drawn to find someone to co-habitate with or they may even consider remarriage for financial reasons. These options may bring about a whole host of other considerations such as how to co-habitate or remarry while ensuring that your new spouse doesn’t have a foothold into your children’s intended inheritance.
Depending on where ‘grays’ live, sometimes downsizing the family home home and moving to a more rural community could be an answer. Of course, this brings a host of other issues such as proximity to children or other important family members as well as having to find new friends to socialize with in an environment in which there is no familiarity.
The golden years may not be looking so golden! Of course, I’m biased when I say that a good financial planner can go a long way in ensuring the right choices are considered. I would also suggest seeking legal advice before co-habitating or remarrying to ensure you aren’t in a position to have to share your half of your half!
Kathryn Jankowski, B.A., CFP, FMA, FDS, FCSI
Vice President, Financial Divorce Specialist
26 Wellington Street East, Suite 710
Toronto, ON M9B 2Z5
416-640-8591
kjankowski@tewealth.com