Getting divorced? Keep this checklist handy.
If you're going through a divorce, you’ve got a lot on your mind, and it’s likely to be a very emotional time. It’s also the time when it’s critical to take a cold, hard, objective look at your financial and legal affairs and make some important changes. An Educators Divorce Expert can help guide you.
Here’s a list of what should be done to help keep you on track:
1. Gather your important records. These include such things as:
- a list of joint assets and debts (including, but not limited to, your home, car, bank records of accounts and loans, Registered Retirement Savings Plans (RRSP), pension savings, and investment account statements)
- will
- tax returns
- credit card records
- mortgage papers
- insurance policies
2. Put aside enough money for the next six to 12 months.
If you have cash, keep it where you can easily get it.
3. Cancel or suspend joint accounts and credit cards.
Split any money in your joint account 50/50, close it, and open a new account in your name only. While you’re at it, change any passwords to online financial accounts.
4. Pay off joint credit cards and other debts.
Once you and your ex-spouse have a separation agreement, you will divide your assets and debts. Then you can pay off your joint credit cards, and either close them down or transfer them to your name only.
5. Open a credit card in your name.
This will ensure you have quick access to funds in the short-term and also help you establish a credit rating of your own.
6. Continue to pay bills on time.
This is no time to incur extra interest charges. More important, you don’t want to risk damaging your credit history, because you’ll need a good credit history if you want to borrow later.
7. Check your credit report within three months of your divorce.
Make sure there are no errors in it. To check your credit report, you have a choice of two major credit bureaus, Equifax Canada and TransUnion Canada.
8. Don’t make big financial decisions right away.
Wait to make big purchases or investment decisions until you and your ex-spouse have divided your assets and debts. Give yourself time to decide what’s best for you and your family, and be sure to get professional advice if you need it.
9. Decide about child support and custody of dependent children.
This requires the advice of a legal professional. The rules you have to follow are those of the province where the paying parent lives. If you and your ex-spouse can’t agree, a court will decide for you.
10. Revise legal documents in your estate plan.
Your estate plan should be updated after any life-changing event. If you have children, it’s important to update your will; your powers of attorney will also need to be revised. Update the beneficiaries for your bank accounts, RRSP, TFSA, and pension. Get legal advice to put everything in order.
11. Update your personal insurance.
This includes automobile, homeowner’s, health, and umbrella liability coverage.
TIP: Pay attention to assets on your homeowner’s policy such as jewellery, collectibles, artwork, and other valuables – if your spouse now owns them, you shouldn’t be paying insurance for them! Consider an umbrella liability policy on yourself.
12. Retitle assets in your name.
Post-divorce, there may be assets that need to be retitled. If you owned your house with your spouse, you should retitle the house in your name personally.
13. Talk to an accountant about your taxes.
Immediately after a divorce, work with your accountant and do a new tax projection based on your income and deductions. Based on your new tax liability, you may need to pay more or less taxes, and change your investments.
14. Analyze your investments.
Did your spouse do the investing for both of you? Are you familiar with the investments you own? Discuss whether your portfolio suits your risk tolerance and goals with a financial advisor. If you choose to make changes to your portfolio or sell, make sure you understand any tax implications.
15. Create a new financial plan.
Your old financial plan probably reflected your finances as a couple. Post-divorce, you should re-evaluate your budget and financial goals.
16. You may need to update your Social Insurance card.
If you change your name after a divorce, you must update your information with Service Canada.
17. Be careful when destroying old records.
You don’t want financial information to end up in the wrong hands. Shred old financial documents, and cut any credit cards both horizontally and vertically. Remove valuable information from your computer and change your personal online passwords.
Educators Financial Group is here to help education members and their families with all their financial issues.
Our Divorce Experts can help guide you through the complicated financial aspects of this new stage in your life. Contact us with your questions.
You’ll find more articles on what you need to know about Divorce in The Learning Centre.
This information is provided for informational and educational purposes only. It should not be treated as legal advice. If you require legal advice, contact a lawyer.
