“I’m not sure my lawyer has a good handle on the financial aspects of my divorce. What should I do? I am worried that my spouse will try to hide assets from me. How can I be sure I get a fair share of his business and other assets?”
You must fully understand the financial aspects of your divorce to make an informed decision that you are comfortable with now and in the future. If your lawyer does not have the time or expertise you require, add an experienced financial advisor with a strong accounting and tax background.
They can supervise additional experts, if required, and support you with initial disclosure submissions, creating and evaluating alternative proposals, and be a trusted resource after the divorce.
Your lawyer can determine your “legal entitlement” for Support and Property issues and your financial advisor can translate that into dollars.
Federal Child Support Guidelines determine most child support obligations. Expenses for special activities like unusual medical/dental expenses, education, etc. can be negotiated. Spousal support has fewer fixed guidelines and requires more negotiation.
Provincial law governs the division of property, or “getting your fair share”, and in Ontario, the increase in value of the net family assets from the date of marriage to the date of separation should be equalized, with some exceptions.
All assets must be disclosed and properly valued. Your financial advisor can assist and supervise other professionals if needed for review of undisclosed assets and valuation of real estate, business interests, and pensions. Their knowledge will ensure that the basis of their valuations and assumptions used in their valuation are in your interests.
All support and property items will have different tax issues, which need to be analyzed and documented so that you understand the after-tax implications of any settlement. Your financial advisor can also prepare yearly cash flows and before-tax and after-tax net-worth statements for you and your spouse for the next 20 years. This is an essential tool to assess the current and long-term fairness of a proposal.
Your financial advisor can also prepare an assessment and propose solutions to protect a surviving spouse and under-age children from the risk if one party dies, becomes disabled, or suffers a critical illness.
Being well informed and supported can keep you focused and reduce stress in the short and long term.
Douglas D. Lamb, CA, CFP, MBA has been providing trusted financial advice for over 30 years and is president of Spera Financial Inc., an independent firm providing financial and investment solutions to individuals undergoing separation and divorce.