Seven tips to keep your finances in order in a separation or divorce

1 If you can afford to, hire a lawyer to safeguard your best interests 

An impartial mediator or arbitrator may be an easier route to a settlement, but depending on your situation, it may not be in your best interest financially. A mediator’s main goal is to have the parties reach a settlement—not to negotiate for what you need or are entitled to. Even if you go that route, consider also hiring a lawyer whose only job will be to focus on your best interests.

2 Take the time to find the right advice 

The most expensive advice may not necessarily be the best for your situation. Take the time you need to find a qualified lawyer who's the right fit for you and your budget. Ask friends for a referral. Knowing something about the lawyer first can help your working relationship.

3 Separate your finances right away if possible

Negative emotions surrounding a separation or divorce can influence how you or your ex-spouse may use your joint accounts or credit cards. You can keep things simple by separating your banking and getting your own credit cards, if you don’t already have separate ones.

4 Consider whether to keep the family home or move

Keeping up a home on a single income could set you up for financial hardship even if you feel it could provide stability for your kids or yourself. You may want to downsize now to be able to save more for any unexpected expenses that could come up when you're a single income household.

5 Prioritize what matters to you, then spend less and try to save more

It may be harder to live the lifestyle you and your family were used to if you’re now a single income household. Take stock of your critical needs, and look for ways to streamline your discretionary spending so you can continue to save for your future.

6 Have a detailed separation agreement 

Include as much information as you can about future considerations and situations that may come up in your separation agreement. Have a plan for each item to avoid having to go back to court or spending money on more legal fees.

7 Consider changing your will and beneficiaries if possible

If your spouse is an heir in your will, you may want to change that at once. Update your will as soon as possible, if you have one, or set one up if you don’t. 

Also, be sure to update your beneficiaries for any insurance policies, savings plans, and retirement plans. If you named your spouse as a beneficiary, you may need to check if the beneficiary is revocable or irrevocable. Revocable means that you can change your beneficiary at anytime; irrevocable means that you need the beneficiary’s consent to change it. This is the case even after a separation or divorce in most of Canada except Quebec, where divorce automatically revokes the beneficiary designation.

All of this should be done only after the advice of counsel, as these kinds of assets sometimes figure into marital settlements.

You’re not alone

It can be overwhelming to think of your finances when you’re dealing with a separation or divorce. These tips, along with guidance from your legal counsel and your financial advisor, can help you keep your financial interests in focus through this life change.