- More than 100,000 Canadians go through a divorce annually
- Fewer than one-in-five are worried about the financial impact of divorce
- For those going through a divorce, financial preparation is key
TORONTO, ONTARIO--(Marketwire - Oct. 6, 2011) - According to Statistics Canada, more than 100,000 Canadians get divorced annually. While these individuals are going through what is sure to be a very emotional life event, a new study from BMO Financial Group finds that few Canadians appreciate the financial considerations and impact of divorce.
The study, conducted by Leger Marketing, set out to gauge Canadians' thoughts on the impact of divorce. Family life was considered the number one element impacted (41 per cent). However, finances and standard of living trailed by a wide margin (19 per cent and 14 per cent respectively) – despite Statistics Canada data showing that, among the key issues of access, custody, property and support cited in active divorce cases, the most common issues raised are support and property at 80 per cent each.
A BMO Retirement Institute study estimates that married adults who become divorced or widowed between the ages of 67 and 80 were projected to have the largest decrease in wealth and the largest increase in poverty, experiencing a decline in median income of as much as 37 per cent.
"Because divorce is an emotionally charged event, financial implications - especially over the long term - can be underestimated," said Caroline Dabu, Vice President, Retirement and Financial Planning, BMO Financial Group. "For individuals going through a divorce, it's essential to take a step back from the emotional element and consider finances both short and long term carefully, whether that means revisiting your financial plan or speaking with a financial professional."
The BMO study also asked Canadians to identify what they believe to be the most important asset considered during a divorce proceeding (with the exception of children):
- Home (53 per cent)
- Pensions (17 per cent)
- Investments (13 per cent)
- Personal items (four per cent)
Ms. Dabu suggested that it is best to have a check list in place if going through a divorce in order to keep various elements top of mind, including wills, real estate, investments and pensions.
Intertwined with the financial considerations of divorce is divorce law and the need for individuals to get legal advice immediately.
"Divorce law has changed dramatically in the past few decades, which often results in misconceptions for couples who are going through one," said Stephen Grant, Counsel, McCarthy Tétrault, LLP. "We often find that our clients are very surprised to see how the law applies to their individual situations."
|McCarthy Tétrault's Stephen Grant advises to keep the following legal considerations in mind:|
- Prepare in advance – Although couples do not enter marriage thinking about divorce, there are some preventative steps you can keep in mind to avoid conflict down the road, including entering into a marriage contract or pre-nuptial agreement.
- Review property jurisdiction – Keep in mind that different provinces have different property laws which govern division of real estate and other assets.
- Research changes to divorce law – Many elements have changed over the years regarding divorce. For example, new rules in Ontario will be in place shortly about how pensions are divided in divorce.
|BMO's Caroline Dabu provides the following financial advice for those going through a divorce:|
- Be familiar with the law- While you may not be a lawyer or accountant; at least have a general familiarity with divorce law and how your new status will impact you from a tax perspective. Also make sure you update your will and power of attorney to reflect the necessary changes caused by the divorce.
- Take inventory of your assets- Do a thoughtful and thorough assessment of all your assets, including investments, real estate, pensions, etc. Classify them based on pre-marriage and separation dates. Depending on the type of assets and when you acquired them, the asset division rules may vary.
- What will your new life look like?- Take out a piece of paper and start mapping out how your new life might look when you are single- cover-off as many elements as possible: kids, parents, housing, retirement plans, social life, donations, friends, etc. Assign a dollar figure next to each, if appropriate.
The online survey was conducted by Leger Marketing from August 15 – August 18, 2011, with 1504 Canadian adults.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $477 billion as at July 31, 2011, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
Amanda Robinson, Toronto
Sarah Bensadoun, Montreal
Laurie Grant, Vancouver