Here’s a link to an article that Marian Gage, Family Law Lawyer, and Kathryn Jankowski, Financial Divorce Specialist contributed to in Yahoo Finance!
http://ca.finance.yahoo.com/blogs/pay-day-/financial-planning-second-marriage-182821020.html
Enjoy!
If you are going through the divorce process the first thought after reading the title of my blog is “Never Again!” right? I know it was for me and, in some ways, it’s true what they say, “You don’t know your spouse until you divorce them!!” Some divorcees move forward, embracing their independence. I know I painted my bedroom pink…because I could! But all that new freedom aside, it tends to be a couples world. It’s also nice to share moments in your life with someone special so, for me, I recanted my “Never Again” and did it a second time.
Now it gets complicated, for sure. We each had our children with our first spouses so there’s that to consider. So, if my husband and I owned our home jointly then if I died my half would revert to him. My husband could then go out an find a new mate and enjoy all the fruits of my labour with his new spouse. My kids? They would get nothing. See how this works? So what can you do to help prevent your dying wishes from going awry? Consider the following:
1) A prenuptial agreement. Some say it make a business out of a loving relationship but I think just the opposite. It protects each of your family’s wishes, their kids and yours, and sets the stage for a well thought out transition of wealth plan that is, hopefully, agreeable to both of you. This may stop future feuding once the initial feelings of love and relationship newness wear off and you start to feel that, perhaps, the relationship is a little unfair, leading to potential resentment and chaos.
2) Own your home as tenants in common, rather than joint tenants, based on a percentage of what each of you put into the equity of the home. I think, though, in terms of fairness, anything you both work on together, while married should be split 50/50. I believe family law would support this as well. Keep in mind that if your wealth is so lop-sided that, if you pass away, your spouse would be homeless, that might cause an issue. There are financial solutions available such as purchasing a life insurance policy to offset any deficiencies in providing reasonable housing for the surviving spouse.
3) Did you know that when you say, “I do”, “I will” or whatever acknowledgement of entering a marriage contract is deemed appropriate for you, that your Will is null and void? Yes, you have to renew your Will. Funny thing is, I tried to renew my Will just days before my wedding and I couldn’t do it. Not really but sort of….I had a temporary Will that stating…”In anticipation of marriage I intend my new Will to state…..” and then we formally re-did it when I returned from my honeymoon. Needless to say, I avoided that sky-jumping opportunity, on my honeymoon, when it presented itself.
4) Check the beneficiaries of your registered plans. Remember that RRSP’s and the like, transfer to a spouse tax-free on first death but they are taxed to anyone else you many want to bequeath…such as your children. Lastly, on this note, depending on how your Will is written, if you leave your RRSP assets to your children your Estate pays the tax which could be as high as 46.41%, or roughly half, and the kids get the full value of the RRSP.
I advocate that a well-thought out plan can save many years of potential resentment and put you both on a fair playing field right from the get-go….so you can enjoy the feeling of being protected, financially, for you and future generations.
My advice? Have a well thought out plan before you stroll down the isle. It may save years of grief if you don’t…and it will set you on a good path to enjoy your new marriage.
By Paul Steckley
I’m often asked about the importance of obtaining custody of a child when parents separate. My answer to most prospective clients always reminds me of the story of Pyrrhus. Pyrrhus was a king in ancient Greece and acclaimed by the ancient scribes as one of history’s greatest military leaders. He successfully defeated the Roman army at the beginning of its ascension to the eventual Roman Empire, but his armies suffered such losses that he is recorded as observing, “If we are victorious in one more battle with the Romans, we shall be utterly ruined.” Hence the term “Pyrrhic victory” has come to apply to any situation where a positive outcome might eventually lead to a much more negative one.
A custody fight is, in my mind, the classic example of a Pyrrhic victory. We have to remember what custody is: the right to make decisions on a behalf of a child. However, while this seems on the face of it to be a crucial issue, in most cases it simply isn’t worth the battle, and all of the negative energy that comes with it. If we look at what important decisions need to be made for a child, they basically come down to a few standard questions. What school will they go to? What sports and activities will they be involved in? What medical treatment will they receive? What religion will they practice? Many of these questions are answered early in a child’s life, and every parent hopes they never have to make a decision about a serious medical procedure. By the time that most parents separate, usually the child’s education path has been decided. They usually just follow the parents’ religious and spiritual upbringing. There’s actually few, if any, really important decisions left to make.
Yet, it’s not uncommon to see parents willing to go to Court to fight over custody. But if custody is simply the right to make decisions for a child, for whom those decisions have usually already been made, what really is the fight about? In most cases it’s about nothing more than exacting some sort of revenge or advantage over the other parent; one last opportunity to “win” in the separation process. However, those fights are protracted and expensive. By the time they are concluded, the “winner” has exhausted a great deal of time, energy, and money to obtain a Court order granting them custody, with all of the negative energies and emotions that the fight elicits from the losing spouse. It’s not uncommon to find parents after a custody battle refusing to speak with each other, sometimes refusing to even be in the presence of the other. Ultimately, the child suffers because the relationship between the parents has been irrevocably damaged. The “winning” parent has obtained their goal but in so doing has poisoned their relationship with the other parent. As well, the “winning” parent often feels dissatisfied with the result because they then experience a level of distrust and uncooperative behaviour from the other parent that the simplest of parental tasks, such as arranging for one of the parents to attend a child’s hockey game, becomes a vitriolic battle of wills. Parents have to arrange separate parent teacher interviews because they can’t stand to be in the same room with each other for even fifteen minutes. The child feels this tension and constantly feels torn between two fronts. Ultimately, there is no winner in a custody battle. Truly, Pyrrus’s words ring as true today as they did thousands of years ago.
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| Paul Steckley, B.A. (Hons), LL.B. 102-2680 Matheson Boulevard East Mississauga, ON, L4W 0A5 |
Profession: Family Law Lawyer Tel: 905-487-5467 Fax: 905-487-5465 paul@paulsteckley.com www.paulsteckley.com |
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Marie Nickle LL.B LL.M Acc.Fm
The Collaborative process is my favourite alternate dispute resolution process. Unlike mediation, it is a one-step model. Mediation requires two steps: one to reach a consensus with the mediator; and two, to receive independent legal advice from lawyers who will also turn the Mediation Report into a legally binding agreement or court order.
The Collaborative process is a full service model as it includes all necessary professionals, including lawyers. When lawyers have been involved from the outset they understand the thought processes that went into the construction, unlike many mediations where lawyers are not present during the mediation sessions and are handed a Mediation Report cold, without any context as to what is important to the parties and how the agreement captures the optimal results, crafted by the parties themselves.
Throughout the Collaborative process, the lawyers are ensuring the agreement meets all the necessary legal requirements and that the clients are legally protected, while the other professionals are providing other necessary and valuable services for the parties. The Collaborative process can be thought of as the process that is a one-stop shop for resolving family conflict upon separation.
| Marie B. NickleThe Galleria 204-1715 Lakeshore Rd. West Mississauga, Ontario L5J 1J6 |
Profession: Family Law Lawyer, Mediator, Collaborative Trainer Tel: 905-823-1232 Fax: 905-823-7104 mariebnickle@bellnet.ca www.mbnlegalresolutions.com |
By Kathryn Jankowski, B.A., CFP, FDS, FCSI
Chances are, if you are reading this post, you, or a close friend or relative, is going through the divorce process. Overwhelming ranges of emotions and lack of clarity may be prevalent but add to this the need for the accumulation of all your financial documentation …all this can add to the stress of it all.
So what do you need to provide to your lawyer or mediator? Here’s the list:
1) The last 3 years of tax returns. Not only that but your Notice of Assessment as well. Just because you disclose what you thought CRA wanted to know it doesn’t mean your return was assessed as filed. There may have been some discrepancies as to what CRA has and what you filed.
2) Pay stubs for the most recent pay periods. If you get paid bi-weekly then a month’s worth of pay stubs will ensure that all your employer-based savings plans and other employment-related fees are all captured.
3) Bank Statements. Some of the bank statement could be in your name, the name of you and your spouse or in a business name. All that needs to be disclosed as well.
4) Brokerage Statements. Or any investment related statements including taxable accounts, Tax-Free Savings Accounts and any registered plans such as Registered Retirement Savings Accounts and Registered Educational Savings Plans.
5) Credit Card Statements. This would include Visa, Mastercard as well as any lines of credit. Also, if you have lines of credit are they secured lines or unsecured?
6) Statements from pension plans, profit sharing retirement plans, employee share purchase programs and any other employer-driven savings plans. If you were employed by the same employer before the marriage you might want to seek out what the value of these savings plans were before the nuptials as well.
7) Real Estate valuations. I strongly recommend getting an appraiser to do this job. Not a real estate agent, an appraiser. This valuation would be for the principle residence as well as any recreational properties or investment properties.
8) Mortgage Statements. Term. Amortization. Mortgage rate.
9) Insurance. Both health insurance, even if it is covered by your employer, and life insurance, whether it be a group benefit through an employer or your own personally owned plan.
10) Business Interests. If you own your own business all the details of your business must be disclosed such as tax filings (if they are filed separately from your own return) and audited business statements. Typically, business valuators have to come in to do an assessment as to the value of the business.
I would advise that you get all this together even before you go see a lawyer…to save time and, potentially, some legal fees. Keep in mind, too, that there are other experts out there that can help with the disclosure documents….such as a Financial Divorce Specialist.
By Paul Steckley
I’m reminded of a situation that really brings home the importance of being honest and frank in your disclosure in a family law matter, whether it in a litigation setting or collaborative, which I’d like to share. It involves a divorcing couple, where both the husband and wife felt they were each owed an equalization payment from the other. The main area of disagreement between them was that the wife had been operating a business prior to separation that she claimed had stopped operating and was essentially worthless at the time that the parties separated. She even went so far as to hire a certified business valuator who completed a report indicating that the business was essentially worthless as it was not operating and had no assets on the valuation date. The husband knew that he business had stopped operating but disagreed that the business was worthless as he knew that some of the business’s assets were unaccounted for. The matter proceeded to trial, where it was revealed that the wife had in fact been less than truthful. She was forced to admit that not only had she hidden some assets from the business but that at least one of the assets was fairly valuable and had been sold recently. She had even gone so far as to hide this information from her own lawyer.
This shocking revelation basically lost her the trial, as the judge found that she lacked credibility and that her evidence, including the evidence of the business valuator, had to be ignored completely. This even included her evidence that proceeds of the sale of the asset were subject to taxation and the payment of legitimate debts. Because of her lack of credibility, the judge ignored everything expect for the gross value of the sale. The end result was that the wife had to make an equalization payment to the husband, a significant swing from the result she had attempted to manufacture, and probably more than what would have happened had she been honest in the first place. Had the true value of these assets been disclosed earlier, the business valuator might have been able to minimize the effect by factoring in taxes and various costs associated with the assets, reducing their value and perhaps eliminating the need for the equalization payment. It is easy to see why she was lured to the idea of hiding assets, thinking that it would give her an advantage in the litigation. However, in this case the lack of full and frank disclosure did not pay the dividends she was expecting. And not including her lawyer in on this subterfuge meant that she denied herself the benefit of guidance from her lawyer that may have made her realize that her attempts would ultimately backfire. As well, a costly trial was inevitable since the husband knew she was being deceitful. It is always best to bring forth all the information you have, and provide it to your spouse, your lawyer, and your financial professional so that it can be dealt with. In the end it will be less costly and will likely lead to a settlement much earlier in the process.
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| Paul Steckley, B.A. (Hons), LL.B. 102-2680 Matheson Boulevard East Mississauga, ON, L4W 0A5 |
Profession: Family Law Lawyer Tel: 905-487-5467 Fax: 905-487-5465 paul@paulsteckley.com www.paulsteckley.com |
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Fareen Jamal
Associate Lawyer
Bales Beall LLP
2501-1 Adelaide Street East
Toronto, ON
M5C 2V9
Tel: 416-203-4538
Fax: 416-203-8592
fjamal@balesbeall.com
Jessie Lamont
Summer Law Student
Bales Beall LLP
2501-1 Adelaide Street East
Toronto, ON
M5C 2V9
Tel: 416-203-4017
Fax: 416-203-8592
jlamont@balesbeall.com
Marie Nickle
The Collaborative Process is my favourite dispute resolution process because lawyers are present in the process to not only problem solve for clients but to protect their individual legal interests throughout. Mediation is a good process, but lawyers are often not present so that when the parties attend ultimately to obtain independent legal advice, because the lawyers’ thought processes have not gone into the construction of the Agreement, they are more likely to find problems due to their lack of understanding of what is ultimately important to the client.
The Collaborative process is a “one stop shop” and accordingly, more effective. If Mediation included the lawyers more often, it would be a better process, in my opinion. I base this on a recent experience where I facilitated a mediation that included the lawyers, who were extremely helpful in narrowing the issues and helping to generate some options. The lawyers then went on to work together to generate a legally binding agreement for the parties. They worked extremely well together and both parties appreciated the “service” provided to them by their lawyers in helping them to resolve.
Marie B. Nickle
The Galleria
204-1715 Lakeshore Rd. West
Mississauga, Ontario L5J 1J6
Profession: Family Law Lawyer, Mediator, Collaborative Trainer
Tel: 905-823-1232
Fax: 905-823-7104
mariebnickle@bellnet.ca
www.mbnlegalresolutions.com
You have struggled with the emotional and psychological issues of our divorce and now it’s time for the financial side. You have assessed your outstanding credit obligations as well as your assets and have decided to divide them equally, each of you walking away with the responsibility of paying off specific debt. You think you have finally come to an agreement so you settle and move on to start a new life. You work hard over the next few years and start putting money away to get you a new home. You think you’ve made it, found a perfect opportunity, so you go to the bank and ask to qualify for a mortgage, then comes the bad news “you don’t qualify due to poor credit history”. How can this be? You have paid everything off and your spouse should have taken care of his/her share, or have they? This can be devastating news when so much time has been spent trying to get your life back in order. So what went wrong and how cold this happen?
Financial matters are one of many issues that can drive couples apart. Often one partner is the spender while the other is far more frugal and watches every penny. You can also have two parties just as equally devoted to their finances but with one individual less knowledgeable who just goes along faithfully with whatever their partner agrees to. Whatever your situation is unless you understand your assets as well as your credit obligations in the marriage you could be in for a big surprise.
During your marriage you and your partner will apply for credit cards, share lines of credit, take out a mortgage, sign on car loans, and hold various other joint liabilities such as “buy now pay later plans”, and possibly investment loans. All these facilities get reported to the credit bureau on a regular basis from the respective lenders. The credit bureau also keeps track of other mutually responsible transactions like cell phone plans, legal judgments against you, collections, as well as bankruptcies and consumer proposals. So what does this mean? All this reporting and updating is being done to establish your individual credit worthiness or ability to repay debt. This comes disguised in the form of a credit report and further revealed as a credit score to would be lenders. So why is this important?
When both partners are disclosing their respective assets and liabilities, many times they forget items that ere taken out years before and have never been used or loans that may have been signed for but now don’t recall the transaction. So you both decide that your agreement will make each party responsible for the pay down of specific debt, normally if it’s a debt associated with a particular asset like a car, it will go with the individual who keeps the car. The problem however, occurs when both parties have jointly signed on a credit obligation and only one of you agrees to keep up the payments. If you signed on that car loan as well, then what happens if your partner stops paying. Although you think you have an agreement in principle your lender will not see it that way and should your partner stop making payments not only is their credit rating affected but so is yours. Those cell phone agreements, maybe both of you signed on the contract now one of you rakes up a huge bill and decides not to pay for it, you guessed it, it becomes you problem as well. That joint line of credit you took out years ago and never used and forgot about, guess what the other party has now decided to use it and not pay it back, you may not get those collection calls because you may have relocated but that first visit to the bank will give you a new reality check. All these lapses in repayment and unpaid credit wreak havoc on your credit rating as well as your credit score, which is an indication of your worthiness to potential lenders. In other words, can they count on you to repay the debt on time and without missing any payments? So how do you protect yourself?
The first step is get informed, understand what family liabilities exist on your credit report, order a copy usually a paid copy is best because this will give specific details on the type of liability and the ownership of that liability whether it is individually held or jointly held. This is often not undertaken by either party and leaves open the possibility of not reporting or closing out old and unused joint credit, leaving an opportunity for potential misuse by either party. Do an inventory on all the credit cards, lines of credit, purchase plans and other charges against your name. If you need help, see the assistance of a Financial Divorce Specialist to help you make sense of it all and guide you through the process.
For all joint liabilities, you will need to make sure that the lender will either re-write you out of the loan or credit obligation and if not you will need to make arrangements to get this facility paid out from family assets and closed. You take a big credit risk by not doing this because you will not be able to protect yourself should the other party not fulfill their end of the bargain leaving you with deteriorated credit and the inability to borrow, rent or with the employers wanted credit checks more often could keep you from getting a job. This holds true for your mortgage as well, make sure it is re-written and that the individual keeping the home can qualify to carry it on their own, other wise you may have no option but to sell the property. Don’t leave yourself exposed to potential credit meltdown, know where you stand and don’t just settle…Settle Smart!
Jo-Anne Fiore, BA, CFP, RRC, FDS
Smart Split Divorce Solutions
Profession: Financial Divorce Specialist, Family Mediator
Tel: 647-367- 9229
jfiore@smartsplitdivorce.com
www.smartsplitdivorce.com
By Paul K. Steckley
The Collaborative Process is unique in that fostering a strong working relationship between the separating couple is crucial to a successful resolution. The more traditional forms for resolution (litigation, negotiations, arbitration, and sometimes even mediation) more often than not involve people that dislike, if not detest, each other and can’t work together effectively (else they would have chosen a different resolution process). People that choose the Collaborative Process at least have a desire to attempt to set aside their differences and work towards a common goal, and they specifically choose to do so in a way that is respectful and, hopefully, cordial. The Process requires spouses to work closely together, on a fairly frequent basis, and this requires a relationship that is built on mutual respect.
The key to creating an atmosphere that will enhance such a relationship is building trust between the spouses: trust that may have become eroded during the separation. One way to build such trust is by ensuring that each party comes to the table with all of their cards laid out in plain sight. If someone suspects that their former partner is holding something back, they naturally become distrustful and are unlikely to actively listen to the needs of the other person, which is a crucial step in the Collaborative Process. If one spouse suspects that the other is hiding assets, for instance, they are more likely to be reluctant to trust that spouse’s claims that the children are of utmost importance to them, for example. Distrust can seep into other areas of discussion and derail the entire Process.
As such, it is vitally important for the spouses to provide full disclosure of all relevant information during the Process. This information includes full financial disclosure and all other information that is relevant and important to understanding the issues at hand and resolving them. Once their other spouse sees that nothing is being hid, their natural defensive posture softens and then they can then truly embrace all the aspects of the Process. Full disclosure fosters trust which creates a stronger working relationship which leads to a better Process that has a higher chance of being successful.
In addition, full disclosure can ensure that the final Separation Agreement, in the document that the spouses and their professionals have worked so hard to complete, stands the test of time. Spouses that have trusted each other throughout the process are more likely to stand by their Agreement, because they won’t have in the back of their minds that nagging suspicion that they were hoodwinked in some manner by their former partner that leads them to question the validity of the Agreement. And, if, for whatever reason, one does decide to question the Agreement, it has a greater chance of being found by a Court to be enforceable if full disclosure was made throughout the process. It is truly a wasteful exercise to engage professionals and spend a great deal of time and money to create a Separation Agreement that is ultimately set aside simply because full disclosure wasn’t made during the collaborative Process. Separation is a difficult emotional journey for anyone to undertake, and while the Collaborative Process can soften that journey somewhat, it’s not something that anyone wishes to relive years from now. Full disclosure can make the process work efficiently and effectively now, and also provide comfort and stability for the future.
Paul Steckley, B.A. (Hons), LL.B.
102-2680 Matheson Boulevard East
Mississauga, ON, L4W 0A5
Profession: Family Law Lawyer
Tel: 905-487-5467
Fax: 905-487-5465
paul@paulsteckley.com
www.paulsteckley.com
By Marian Gage
I just celebrated my seventh Mother’s Day as a mother. As always, I got to sleep in. It’s the one day of the year when I am guaranateed a sleep-in. I can start the day slowly. I can shower and get dressed alone without my kids asking for everyting from breakfast to that puppy dog hair clip my daughter got in a loot bag three years ago and now just remembered. My husband whisks the kids away early (ususally in their pajamas). They come back at a much more civilized time with coffee and my kid-made gifts they created at school. We enjoy the rest of the day together. It’s all very nice.
On Father’s Day my husband knows he can expect the same royal treatment.
THis makes me think about so many of the divorce cases I’ve had where we’ve been negotiating Mother’s Day and Father’s Day schedules for children. I’ve had some really nasty cases, as I’m sure most of us have, where Dad doesn’t want to take the kids to see Mom on Mother’s Day because it’s “his” weekend and they’re going for bruch with Grandma, or where the parents fight over time, down to the minute, that they will spend with the children on each of these special days.
In high conflict cases parents can end up spending outrageous amounts of time and money arguing over minutes – will the children be home the night before, or by 7:00a.m. so that Dad can spend the entire day with them on Father’s Day, or will it be noon after breakfast with Mom and Grandpa?
There is, of course, a much more enjoyable way to spend the holiday, even if you’re separated. Mom…why not sleep in on Mother’s Day and let Dad wake up at the crack of dawn with the kids, and bring them over later? Why not reciprocate on Father’s Day and give Dad the same opportunity? Or, if your former spouse just loves waking up early with the kdis, why not offer a break later on in the day?
Separated parents who work collaboratively can find a way to enjoy all of the Mother’s Day/Father’s Day perks on their special days. It’s worth exploring!
Marian G. Gage
O’Connor MacLeod Hanna LLP
700 Kerr Street
Oakville, ON L6K 3W5
Profession: Family Law Lawyer
Tel: 905.842.8030 x3312
Fax: 905.842.2460
gage@omh.ca
www.omh.ca
By Meredith Cox
Depending on how the day has unfolded I may indulge in N.C.I.S. or Criminal Minds reruns or some lighter fare such as Real Housewives of Vancouver. One late night I tuned into Family Matters, Justice Harvey Brownstone’s show on Family Law.
The guest was former Alberta Court Judge, Michael Moran. He was explaining his decision to leave the bench after 22 years to become a mediator so he could serve the public better. As a mediator he has the luxury of being able to listen fully to the parties’ perspectives to help them solve their own problems. He cited the “Judge Judy Phenomenon” where the litigants tell their story, she interrupts a few times, gives a quick decision and they cut to a commercial. The result of the show is a distinctly false impression of the justice system. Judges do not always have the freedom to dig deep and understand every aspect of the conflict. Judicial decisions are frequently made in the face of incomplete information. He realized the best outcome could not possibly come from a fraction of the story.
I was reminded of two recent cases in which I had acted for the husband and the wife respectively. We started both cases by suggesting mediation to the other side. They refused so we commenced a proceeding in Court. In one case my client was threatened with contempt of court for trying to tell her side of the story. We were getting nowhere and the trials were looming. Neither party had the funds for a trial. After many fruitlessly painful court attendances and thousands of dollars later we came full circle and agreed to mediation.
After the first mediation session both clients reported feeling satisfied with the way the day unfolded. They felt heard and understood. They sat with a mediator for the day and hashed out their issues. Both parties got to talk at length about what they wanted and what happened behind the scenes before and after separation. It took time, but it was well worth it. Some of the misunderstandings were cleared up. At the break one of the couples went out to get coffee for everyone. They returned chatting and laughing. The connection between them was tangible. In both cases, the mediator used the newly built bridges to assist with designing the terms of the settlement.
The process of mediation got the parties and the lawyers into different mindsets of calm, compassion and warmth. We worked as teams instead of adversaries to climb the proverbial mountain. It was not easy, but both cases eventually settled. Mediation produced healthier and more effective ways to resolve conflict for the clients. Simply, it was less stressful and more rewarding for all involved.
About Meredith Cox
Meredith Cox is a collaborative family lawyer and trained mediator. Her law practice and ongoing education have focused on the diverse interests of family law clients since 1994. After learning about Collaborative Family Law in 2002, she was immediately convinced the process offered a better way to help clients create their own solutions. Meredith is firmly committed to resolving family law disputes respectfully and sensibly for the sake of the clients and the children caught in the middle.