D Smith: Dealing with divorce and separation

The laws relating to relationship breakdown can be complex.

Upon the breakup of a marriage or long-term relationship, you need to have open communication with each other to resolve issues.

If you need an impartial third party, then a mediator or lawyer will provide independent legal advice.

The laws relating to relationship breakdown can be complex. The courts are concerned with children as one of the first and foremost important issues to deal with. The division of family assets need to be divided equally.

Family assets include the family home and are subject to division regardless of when the home was purchased or who purchased it.

Other family assets include vehicles, furniture, second homes, bank accounts, RRSP and other assets used by the family.

To find out how much you own and how much you owe, begin by listing your accumulated assets minus the liabilities.  The family financial obligations need to be organized with the net amount being divided fairly between the couple.

There are many life changes that occur during marriage and after a marriage ends.

Couples usually make each other the beneficiary of their wills. Upon divorce, review your will as any provisions in the will may no longer be valid. When drafting a new will after a marriage breakdown, ensure any dependent children are properly provided for in your will.

With registered assets with named beneficiaries, you will need to review your beneficiary designations to determine if they are still appropriate during and after your separation / divorce.

In the case or registered assets such as RRSPs that are transferred subject to a legal agreement on relationship breakdown, the tax form T2220 is completed and the assets are transferred within the tax shelter to avoid immediate taxation.

If you or your spouse are members of a Registered Pension Plan, a division of these assets will also be a factor in the division of assets.

Canada Pension Plan recognizes that in a legal marriage or common-law relationship, both spouses or common-law partners share in the building of their assets and entitlements. Among these are Canada Pension Plan pension credits.

When a relationship ends, the Canada Pension Plan pension credits the couple built up during the time they lived together can be divided equally between them. This division is called credit splitting.

Credits can be split even if one spouse or common-law partner did not pay into the Canada Pension Plan. With life insurance, married couples name each other as beneficiaries of each other’s life insurance.

If you have children you may choose to continue with the existing life insurance to ensure that if the supporting person dies, there is sufficient money to support the children. Life insurance is often used instead of mortgage insurance and if that is the case, the insurance policy should remain in force until all financial obligations have been dealt with.

If you do not contact your insurance company to change the beneficiary, your former spouse will continue to be the beneficiary on your policy.  You can also update your beneficiary to reflect the change of marital status.

When a marriage or long term relationship breaks up, there are many important life changes to review.  The division of accumulated assets needs to be fairly divided.


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