There are two things in Divorce, money and kids.
The issue is that emotions can play havoc with our ability to make sound financial decisions in divorce. Finances & divorce go hand in hand yet mix like oil and water. While kids are most couples number one priority, grounded parenting discussions and planning is not likely until the money issues are resolved.
So while it might seem that parenting should be decided first, this is not the best strategy. Deal with money matters first and put in place a short-term parenting plan, while negotiations are ongoing. Even if this seems counter-intuitive — it works much better for a faster, less costly divorce.
Money Matters in Finances & Divorce:
There are two important aspects when it comes to finances & divorce: child support and division of assets. Whether you are getting divorced currently or foresee doing so on the horizon, here is what to know.
The Federal Support Guidelines set out specifically what child support will be. This is based on the incomes (usually starting with line 150 of the T1s) and the number of dependent children. Child support will change depending on whether the parents are sharing 50/50 or some other scenario. If parents are sharing 50/50 then the child support paid will be based on the amount payable by the higher income earner minus the amount payable by the lower-income earner. The difference is then payable to the lower-income earner. If parenting is not close to 50/50 then child support is payable on the income of the non-residential parent regardless of whether they are the lower or higher income earner.
There are many tables available online now so that anyone can access these calculations.
The issue with child support and what can cause arguing is the determination of income — especially for self-employed individuals or individuals with other non-T4 income. The other issue that must be determined is the section 7’s or commonly known as extraordinary expenses. These expenses are those that are above and beyond basic child support. These expenses are usually shared pro rata based on incomes and are agreed to in advance unless otherwise decided.
Usually parties will start with the guidelines then negotiate from there. This is the one area that can cause significant friction between parties and the argument for paying or not paying and the amounts are very much the debate of many negotiations and fights. For just about any case, you should have the help of both highly skilled mediators and lawyers.
The Provincial Property Acts set out the laws around division of property in divorce. The premise across Canada (excluding Quebec) is 50/50 for assets accumulated during the marriage. There are rules applying to pre-marriage exemptions including property, inheritances etc. This area is complex and again seeking the advice of lawyers and using skilled mediators is important to ensure that the best possible outcome is achieved for both parties.
The above sets out some very high-level points about the financial aspects of divorce. Decisions made during divorce can impact the rest of your life. Have all of the information, take your time, and think everything through.
Contemplate both short-term and long-term implications. Make decisions that are non-emotional and will stand the test of time. Do not use the financial negotiations as the platform for revenge or expect that your ex “needs to pay for their wrong doings.” It will cost you both way too much.
Being careful and methodical will result in the best outcome. Leave the emotions for the counseling sessions and keep the fighting out of the courts.