Facing divorce. . .Should I sell the house now?

 If you believe that we are facing a “real estate bubble” ,  the decision of what to do with your home   is  challenging.. sell now and wait to buy if/when prices go down?

 What does that mean to you if you’re someone facing divorce today?  Should you consider selling quickly to take advantage of the market now?  Some people believe they should sell now and split the money and each buy something  on you own before prices climb even further.  

Many couples  have to make  tough decisions  about their home sometimes before they have a final separation agreement in place.

Many people are carrying large debt loads and are shocked to see how much they in fact have left over  after paying off all their debts.  In calculating the cost of a new home, you must take into account such things as legal fees, moving costs, utility set up fees,  condo fees, etc

The big expense that buyers overlook, however,  is land transfer tax.  And if you  considering buying in the GTA, there is an additional land transfer tax assessed.  Most realtors and mortgage brokers websites have a land transfer tax calculator. If you can’t  locate one easily, let me know and I’ll do the  calculation for you.

For most couples, the marital home is your  largest asset. You may want to look at all your options and get  financial advice before moving on!

When You are the One Paying Support

According to a recent study done by Prudential Insurance in the U.S. of  the 1,140 women and 604 men surveyed,  it was reported that 22% of women ( married or with a partner)made more money than their husband or partner.

This economic statistic is certainly a factor why women increasingly are paying support. However, in our society, women seem surprised to have to pay support even if they earn more. As the financial gender gap continues to narrow, an increasing number of women involved in a divorce must confront the possibility of paying support to their spouse. (AKA, “Manimony”).

I have assisted many divorcing women who face the prospect of paying support. Women who have worked hard building careers, taking care of children, dealing with aging parents, feel that they have contributed more than their fair share while married.

This also means that women are increasingly responsible for their finances and investment decisions. This is an area where women have less confident in their knowledge of finances. This adds addition pressure and concerns for women who have to  deal with ongoing payments along with  managing their current lifestyle and worrying about retirement.

Are you someone who makes more money than your spouse? If you found yourself in this situation, how did you deal with this issue?

Grey Divorce Challenges

According to the most recent statistics available from  Statistics Canada (2008) , there were 852 divorces where both partners were 65 and older.  Based on my experience and the clients I see, this trend is growing.  When divorcing after a long term marriage or at an age where retirement is closing in, such  ‘grey divorces” pose unique challenges.

If one spouse stayed at home while the other worked or has retired, it is difficult to face the financial realities of dividing assets and debts as well as  splitting retirement income. Many people assume that after divorce, they expect to keep same standard of living through the division of assets and spousal support. The ex-spouse receiving support may have to eventually  earn his or her  own income. Finding employment can be very difficult in the current economy, especially for those over age 50.

After years  of marriage, divorce  at this stage of life can be a  financial as well as am emotional  shock. Couples facing divorce  at older ages are more likely to suffer from medical problems,  and complicated family issues. These issues require careful attention, management and support. Working through a settlement outside the courts, through mediation or collaborative divorce  allows “grey divorcing” couples the  opportunity to look at their futures and create a settlement that can meet their original retirement plans.

Since most of the settlement issues are financial, working  with financial professionals  who specialize in divorce is critical.  They can help identify all assets, debts and income from the marriage.  They can help develop realistic post divorce budgets. They can help couples, working together with their  lawyers/mediators,  make a plan to match the divorce outcome to  their desired lifestyle after divorce and into retirement.

Get Real: Divorce is a business

Have you put aside the romantic notion that love conquers all…No matter how intense your emotions, it’s important to remember that ending a marriage is in fact a business deal. Those who ignore the business aspects of divorce do so at their own peril, as that divorce statistic shows. Many people seemed shocked by the advice that women and men should prepare themselves financially before ending a marriage.

Here are (3) important business affairs that required your attention:

1. Pull your credit report.Pull your credit report before the divorce so that anything in dispute can be resolved before the divorce is final.

2. Open individual bank, credit card and brokerage accounts.
You also need to do this before the breakup is official. It will be easier to get a credit card and bank account in your own name while you are still married. This is especially important for a woman who has never established credit in her own name.

3. Close all joint accounts.Closing shared accounts is a critical step and one that is too often overlooked. Cancel the accounts and be sure to request that they report each account as “closed by customer” to the credit bureaus. Divorce can take time; pay off share debt with joint assets if possible.

Since money is the number one cause of divorce, it’s safe to assume that splitting the financial sheets won’t be easy. Have you considered all of the financial ramifications in your situation?

DIVORCE TALKS – GREY DIVORCE

For many people, the thought of divorce is overwhelming. Not surprising when you consider that almost all married people centre their lives around their spouse, their children and their home. Divorce changes all of that. It depends on how you approach the situation, who you talk to, and how motivated you are to protect the dignity, integrity and long term interests of your family.

Divorce Talks is a series of live sessions for people who are thinking about, or in the process of, getting a divorce. Mutual Solutions, an association between Eva Sachs and Marion Korn, a family law lawyer, hosts every Divorce Talks session. These sessions help someone considering separation gain an understanding of the decisions they will need to make, and how to move to a positive outcome for everyone. Knowing what must happen, what can happen, and what your options are will make a huge difference in the outcome for you and your family.

Our next Divorce Talks session is Tues July 17th where we will be discussing the unique issues for couples separating later in life.  For the new generation of   ”empty – nesters”, divorce is increasingly common. Though overall divorce rates have declined since spiking in the 1980s, there has been a rise in “grey divorce”. The issues are significantly different  for someone in their 50’s or older than someone in their 30’s or 40’s.

If you or someone you know, is considering a divorce, join us for a conversation. Eva and Marion will talk about the things that matter the most when thinking about separation and divorce – finances, kids, and your future.

For details, go to http://mutualsolutions.ca/divorce-talk/

 

How do I know if I need Financial Advice in my Divorce?

By Eva Sachs CFP CDFA

Certified Divorce Financial Analyst and Founder of Women in Divorce Financial

“  I just want what’s fair …I just want what I’m entitled to.”

If it was just that easy, divorce lawyers & courts wouldn’t be busy.

My  approach for divorcing women is from the perspective “ what  do I need to be OK?”

I believe that most divorcing women do want to arrive at a settlement that works for both partners. What’s missing in most divorces processes is financial expertise.

How do you know if you need financial advice in your divorce?

If any one of the situations listed below is your case, you have good reason to get some expert financial advice

  • You don’t understand your situation
  • You have a good income and a busy schedule, so you would be better off if someone else did the paperwork
  • You want to be sure you’re doing the right thing and have the confidence of knowing it’s being done right
  • The division of marital assets and debts is unequal
  • Home or real estate  is being kept to sell later
  • Major asset is being divided or sold
  • One or both spouses are self-employed owners

With expert financial advice early in the divorce process, women can increase their chances for arriving at a settlement that works.

Are you Financially Prepared for Divorce?

By Eva Sachs CFP CDFA

Certified Divorce Financial Analyst and Founder of Women in Divorce Financial

 “Why didn’t I pay more attention to our family finances?”

I frequently hear this from women who find themselves facing divorce.  This is the time for women to start to make constructive and knowledgeable decisions about their money and their future. It’s never too late to get started.

Here are some steps you can take to get financial prepared for your divorce. (Frankly it’s good advice even if you aren’t facing divorce)

Pay Attention to the Household Finances
You should attend meetings with insurance agents, accountants, financial planners and lawyers. You should also look over monthly bank statements and credit-card bills. Ask about your husband’s company benefits including bonuses, other “perks”,  company pensions, and other savings  plans, etc. Keep a list of all bank and brokerage accounts and insurance policies.

Don’t lose your Financial Identity
You always want to maintain your own credit identity. Check if your credit cards are in your own name or if you are simply an authorized user as a lack of credit history can work against you.  You should have three bank accounts (his, hers and ours) and maintain separate credit cards.

Keep Your Skills Fresh
While you might welcome the chance to stay home with your kids, the longer you’re out of the work force, the harder it can be to jump back in. Women often face lowball wages or lower job titles when they try to return to work after a long hiatus.

Save for Retirement
Many married women don’t make retirement-saving a priority. If the husband is the primary wage earner, the wife often trusts her spouse to save enough for their collective golden years. A woman spending her retirement savings, (sometime all on legal fees),   is particularly distressing considering that women, on average, live six years longer than men.

Get Financial Guidance
When women are going through a divorce, they need to determine which assets will help them pay their bills and reach their long-term goals. Too many women fight for the home to avoid uprooting their children, only to find that they don’t have the cash flow to pay for it.

Divorce is not only the end of a marriage but it is the breakup of an economic unit. Financial awareness will go a long way to help you feel more in control and better equipped to make reasoned decisions.