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Financial advisor can help ex-spouses navigate fiscal uncertainties

Anyone going through a separation would be wise to consult with a financial advisor to help protect their assets and plan for the future, says Toronto family lawyer Carolina Paterson.

“It’s a very expensive period, and you may need many different professionals for a variety of reasons, but the reality is, knowledge is power and the more you know, the better off you are,” says Paterson, an associate with Fogelman Law.

Although you may already be paying for a lawyer, a therapist, a business valuator or other professionals, the sooner you can retain financial advice, the better, she tells AdvocateDaily.com.

“It can be an emotional time, and an expert can help you navigate your financial priorities and your short- and long-term goals as you move from an intact family to a new configuration,” she says.

Separation doesn’t necessarily mean an individual will lose money either, Paterson adds.

“You could become a sudden wealth recipient,” she says. “You may not have been the spouse with many assets or income, and as support payments are determined, your standard of living, on its face, could increase.”

On the other hand, Paterson says a spouse could also see their standard of living go down, depending on whether there are children and what the household expenses are.

“It can be a significant transition with many things happening all at once,” she says. “Financial planning can help you realize what those realities are, and what they may be years down the road.”

Someone who doesn’t seek financial advice during a separation may not realize the monetary implications of their changing situation, Paterson adds. A person may be asset-rich and income-poor, or the opposite. At the same time, a spouse may need assistance handling a sudden influx of investments if they receive half of their ex-spouse’s pension or retirement savings, for example.

People also commonly need advice on how to handle the matrimonial home, she says.

“You may want to stay in the family home for emotional reasons, but managing and carrying the costs may not be the most financially feasible scenario,” Paterson says. “It may be better to downsize or take on a home you can reasonably afford.”

By the same token, an ex-spouse’s debt accumulated during the marriage could wipe out the value of any assets or savings during the calculation of the Net Family Property, which determines how wealth is divided after the dissolution of a marriage, she says.

Of course, the best way to prevent many financial headaches during a divorce is to sign a marriage contract upfront, Paterson says.

“No one gets married with the intention of dissolving the relationship,” she says. “But if you create a blueprint for how you would conduct yourself, you can more easily weather any unforeseen storm in the future, providing the bedrocks to lay decisions on in the future.”

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