When the bonds of marriage begin to break, the impact can be immense. Separation or divorce brings an emotional blow that is often compounded by a financial hit.
“Money goes into motion when life goes into transition,” says Mitch Anthony, author and president of Advisor Insights and the Financial Life Planning Institute. “Large amounts of money can, and do, move during these often chaotic events. Where divorce is concerned, the exact opposite of 'compounding' occurs—while compounding multiplies wealth over time, divorce divides it.”
This may mean having the right financial planning support, for example, when you are feeling vulnerable and just want a quick agreement to get the emotional pain over and done with. “One party may give it all away but a few years later have buyer’s remorse when they realize the full impact of what they agreed to,” says D. Scott Spence, a Certified Financial Planner® professional, Certified Divorce Financial Analyst and founder of Second Half Solutions Ltd. “Divorce is about making informed decisions, regulating emotions and facilitating change,” he says. It’s about finding a balance between meeting immediate, mid-term and long term needs; being accountable for the situation; participating in a resolution; learning how to move forward alone; and managing expectations.
If separation is inevitable, couples must deal with the economic reality and necessary life changes that come as a result. Getting the right advice is paramount. Gathering a group of trusted professionals (lawyer, accountant, financial planning professional) experienced in the issues of divorce or separation is key. Together, they can help soften the impact and bring about a resolution that is reasonable, manageable, and in the best interest of you and your family.
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1 According to Canadian Lawyer’s 2015 legal fees survey, he average cost of an uncontested divorce is $1,845. If the breakup is contested the average cost jumps to $13,638 and can reach as high as $87,974.