Many individuals going through a divorce are overwhelmed and unaware of how to start their divorce process. This week on our Linkedin Live, we hosted divorce coach and author of I Am Getting Divorced Where Do I Start? A Simple Divorce Self Help Journal, Stella Papadopoulos to share her expertise on how to financially start the divorce journey.
50% of marriages end in divorce
Preparing for divorce ahead of time can help couples manage their divorce process effectively. Stella mentioned how couples plan for their wedding for extended periods of time yet fail to plan for a potential divorce in a worst-case scenario. Although it might feel dishonest to prepare for a divorce while being married, it is a way to financially prepare for yourself for risks.
How can people effectively manage their divorce process?
Assessing your financial situation:
Stella mentioned that the most asked question is she gets when talking to prospective divorcees is ‘will I be okay?’ and understanding your finances is the answer to this question. Tracking your expenses and going over the last 12 months of your bank statements can help you understand your income and expenses which can reveal how your financial situation is to support yourself during and after separation. Individuals going through a divorce should also locate and compile a family net-worth statement. Seek out investment statements, pension statements, mortgage and debt statements to have a clearer picture of what financial shape you are in. After seeing the financial statements, you will have a better handle on your finances and may lead you to feel more in control of your circumstances.
Speak to a financial planner:
A financial planner can help you to decipher financial documents. A financial planner can also ask you the right questions and help you to sort out the right financial documents to get organized around your divorce. The truth is, when you understand your financial numbers, you can make better decisions with your divorce lawyers about what you are entitled to in the divorce. Without this you may have misconceptions about how much assets the family has and how much debt the family could be in. You could also risk making decisions around settlement without a clear picture of what you will need from the divorce to be comfortable on your own down the road.
Prepare for your lawyers:
Getting a credit score on yourself and your spouse will give you a sense of the financial health of your family. Stella also mentioned utilizing Form 3 of Quebec that calculates the individuals’ net worth statement and itemizes all their expenses such as furniture repair, household repair, health and beauty. This form can help you budget for your cost of living and help guide your divorce lawyer when negotiating a settlement.
Find the right lawyer:
As individuals work very closely with their lawyers, finding the right one is highly important. Most lawyers offer a complimentary call to potential clients and individuals can use this opportunity to interview them and see how they will fit their needs. Is your lawyer being condescending or compassionate? Do they make you feel secure? Do they specialize in family law? Are they transparent with their fees? In her book, I am Getting Divorced Now What she has a checklist of what to ask the lawyer before deciding on who you will work with.
Understand retainer fees:
30% of women have a corporate pension and 25% have RRSPs that will become their income. If a lawyer requires you to put down a high retainer fee, you will need to understand what the fees mean and how much it will cost to maintain regular contact with your lawyer.
Use your time wisely:
A divorce can have financial downsides as well as emotional ones. Some couples who are going through a divorce may spend too much time arguing with each other, causing high legal expenses that drain their savings.
Prepare a financial binder:
Communicating with lawyers consistently might lead to high legal fees as lawyers charge by the minute. Clients who don’t keep their financial documents in order might end up having more discussions with their lawyers, thus having all financial documents in one place can help your divorce process to be more efficient while saving you money. Stella also suggested bringing in a notebook to keep notes of what your lawyers might ask of you for your next meeting to avoid making repetitive requests for information from the lawyer. It also helps to make duplicates of your documents to keep one for your records.
Don’t settle emotionally when negotiating financially:
The emotional tolls of divorce can impact your decisions around negotiation. However, it’s important to realize the long-term effect of your settlement as it will financially support the rest of your life. Stella suggested advocating for yourself financially in the settlement as much as possible. Keep in mind, in the future you may need healthcare, or you may risk running out of savings. The more of a financial cushion you have the better.
Can you significantly build your financial fortress after a divorce?
Absolutely! With the help of a team of professionals, you can negotiate your settlement and significantly build your finances. If you want to learn more about how you can get started with your financial journey with our team, book your complimentary 30-minute session now!
To learn more about Stella’s book, access her resources or a complimentary 30-minute consultation, check out her website here.
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