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Financial knowledge key to good divorce decisions
Husbands deal with money issues in most marriages

By Kim Guttormson, Calgary Herald September 12, 2010
This article was first published in the Calgary Herald and is reprinted here with their full permission.

As she faced the end of her 22-year marriage, Lisa also had to come to terms with the fact that she knew almost nothing about her family's financial situation.

Mortgage, investments, bills -- dealing with the money during their decades-long relationship had been left to her husband, who works in the financial services industry.

"I entrusted everything to him," said Lisa, whose divorce isn't finalized and didn't want her last name used. "I never questioned anything. I was totally in the dark about that.

"When you're going through the emotional trauma of divorce, the last thing you need to focus on is all of that."

Lisa, a 49-year-old who stayed home to raise two children, said trying to get up to speed on monthly bills and make long-term financial decisions was overwhelming.

But for couples splitting up, it's necessary for both partners to have a clear picture of assets and debts, and an understanding of what dividing those up really means, says Sharon Numerow, president of Alberta Divorce Finances Ltd.

"In 90 per cent of the couples, one person -- and 80 per cent of the time it's the women -- aren't involved in the family finances," Numerow said, adding that she sees that imbalance in couples of all ages. "When you're married, everyone has roles.

"Unfortunately, when you lose your spouse or go through a divorce, the first issue is having no idea what the family assets or liabilities are comprised of.

"And once they've found out, they don't understand most of it."

Whether a spouse ends up with the house or half a pension or a portion of the investment portfolio, each choice has long-term financial implications, she added.

"It's not a very good time to be making major financial decisions and unfortunately that's what they have to do," Numerow said.

Karen Stewart, who founded Fairway Divorce after spending an estimated $500,000 and four years fighting her own ex-husband, says using a negotiator to deal with each spouse means emotions are less likely to get in the way.

The No. 1 pitfall Stewart sees is that people look to the divorce process as the way to get revenge. "People look to the system to slap their ex-spouse in the face," Stewart said. "I hear it all the time: 'I just want someone to tell him or her he or she was wrong.'

"Well, guess what? That's not going to happen."

Fairway starts with the money, asking the parties to agree on a list of assets and their value, before arguing about who gets what so that the assets can be divided according to financial, not emotional, worth.

"If I'm going to get the house, it's going to have a much lower value than if my ex gets the house," Stewart said.

If the parties can't agree on the value of an asset, the party who values it more gets it, she added.

"And when you use that tactic, it's amazing what happens," Stewart said. "If you really think the house is (worth) $1.5 million, then guess what, you got it for that."

Numerow said the emotional connection of the house or family cabin often outweighs financial common sense.

"You can go through the financial sense of it all and some will still say, 'I've got to keep the house,' " she said.

Her advice: "If you're going to make an emotional decision, make sure it's a decision you can get out of."

Lisa understands that, but says the home is her sanctuary, especially with her youngest still in high school.

Numerow, who works with clients individually or together, often referred to her by lawyers, said people going through a divorce need to understand every choice has a different impact.

"We look at options with them and help them understand the short-term and long-term implications of every decision that has to be made," she said, including tax implications.

Clients learn that "$100,000 in RRSPs versus cash versus the house versus a rental property -- they're not all the same."

Other things those about to be single need to consider, Numerow said, include the cost of daily living and support payments.

"If you take an $80,000 salary, even divided by two, that's a struggle for both of you," she said. "There's no way people can translate that if they don't understand the day-to-day cost of living.

"It doesn't matter how little you have or how much you have, people are all as panicked about the future of their financial situation."

The best thing couples can do is to financially educate themselves, Numerow believes.

Even for those still happily together, a fundamental grasp of the financial picture is a must for both, she said, even if it's simply one updating the other every six months.

With files from Postmedia News kguttormson@theherald.canwest.com

© Copyright (c) The Calgary Herald

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