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Separation and divorce planning: Where to start

December 2021

The new year is a time for fresh starts and for some couples that might mean ending a marriage that’s no longer working.


The pandemic has also accelerated Canada’s already rising divorce rate, according to legal experts, as couples were forced to spend more time together amid COVID-19 restrictions.


Separating and getting divorced can be a challenging and stressful process, but the best way to deal with it is to surround oneself with a team of advisors to help handle the emotional and financial changes.


“Separation is never easy,” says Tiffany Harding, vice-president and head of wealth planning at Gluskin Sheff. “There’s not only a change in family but also lifestyle, community and finances.”


Harding, who holds a certified divorce financial analyst designation, recommends people facing a separation engage a team of professionals early on to ensure they are getting appropriate advice during the various stages of a separation and divorce. Your team of professionals will likely include accountants, family law, tax and estate lawyers, wealth planners, investment advisors, valuators and others.


Build your support team


When it comes to a relationship breakdown, Harding also recommends forming a circle of care, a support network including professionals who can provide emotional support during this transition. Harding adds focusing on well-being throughout the process can help you to better handle the legal and financial issues that come along with separation and divorce.


Get your financial house in order


Next, Harding recommends individuals going through a marital or common-law separation gather critical documents and financial information as soon as possible. Providing a financial snapshot that includes preparing a net worth and cash flow statement.


Compile critical documents such as tax returns, marriage contracts, documentation related to spousal loans, family trusts and any financial gifts or inheritances received during the course of marriage. It’s also a good idea to do a household inventory, including what items were brought into the marriage, such as family heirlooms.


Such information will be critical when meeting with a family law lawyer for the first time to discuss the separation and divorce process, says  Jag Gandhi, vice-president of wealth planning at Gluskin Sheff.


“One of the first things a family law lawyer is going to request is full financial disclosure and critical documentation; since they can’t advise properly without it,” says Gandhi. “To make the conversation valuable, it’s a good idea to be prepared as much as possible and to have a package of information ready for them to review.”


Maintain lifestyle status quo


People going through a relationship breakdown should also maintain the status quo when it comes to their lifestyle, including spending, until they have consulted with their family law lawyer.


“Don’t do anything that could be considered drastic or dishonest,” Harding says, such as trying to hide money or making big-ticket purchases or running up a line of credit. The movement of money and change of spending pattern prior to and during separation will likely be reviewed by lawyers and any significant changes could be viewed negatively and result in unintended consequences.


Gandhi adds intentionally trying to deplete assets by transferring them could also be considered a fraudulent conveyance, which is disposing of assets to hinder or delay creditors or others.


Couples preparing for the dissolution of a relationship should consult with their family law lawyer before deciding to leave the home unless there are safety concerns. “Leaving the home won’t affect equalization of financial assets because the home is considered matrimonial, but there could be other implications,” Gandhi says.


Navigate the legal process and separation agreement


Before a divorce is finalized, a separation agreement enables spouses to live “separate and apart” from the other person without legally ending the marriage.


Before signing any separation agreement, it’s a good idea to speak to a family law lawyer to make sure all of the legal consequences of the decisions are known.


According to Gandhi, separation agreements can be complex for any couple, but particularly for high-net-worth couples with unique assets and complexities associated with their finances; businesses, shareholder agreements, trusts and tax liabilities, which must all be taken into consideration in the final agreement.


Harding also recommends keeping financial advisors in the loop to review and potentially reassess the impact of any decisions on finances going forward.


Update wills and powers of attorney


During the negotiating and drafting of the separation agreement, parties should also consider putting in place a stop-gap will and powers of attorney, Gandhi says. For example, someone may wish to remove their soon-to-be-ex-spouse from the documents, or certain family members, especially if the divorce is contentious.


“The intention is that, if something were to happen to the person before the separation agreement was finalized, the person can dictate who they want in control of their assets and the process,” says Gandhi. “Then, once the agreement is signed, the estate documents should be reviewed again and updated, as needed.”


It also could be months or years before a separation agreement is finalized, not to mention the divorce, which is why the stop-gap estate documents are important.


Gandhi also points to Ontario’s Bill 245, the Acceleration Access to Justice Act, which changes the law in Ontario related to rights for separated spouses, treating them more like divorced spouses. These laws will come into effect sometime after January 2022.


Move forward


Separation and divorce are considered major life events that can weigh on a person’s emotional and financial health. But individuals don’t have to go through it alone, Harding and Gandhi say.


“It does take a team effort to get through such a major life event,” Gandhi says. “Relying on a support network, financial advisors, family law professionals, as well as friends and family may help one get through this difficult transition. Having different resources may help provide comfort and reassurance that it will be okay.”


Harding, who went through a divorce many years ago, advises others to focus on their well-being, particularly when it gets tough—which it will.


“Remember why you’re doing it,” Harding says. “So, you can live the happy life that you deserve.”



* Please note there are references to employees who are no longer with the firm, but were as of the date of publication.

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