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Preparing for Divorce: 7 steps to protect you

Feb 01, 2021

Usually, I help families divorce peacefully. Unfortunately, this isn’t always going to work. As a lawyer who went to court, I saw some really nasty behaviour in which one spouse hid income and property. If this may be your situation, you need some information about what to do. It is always best to prepare for the worst. This way, you will be ready for things start to go sideways.

Or at the very least, you suspect your marriage isn’t going to last, and you want to protect yourself from the worst outcomes of divorce. Yet you do not know where to start.

Preparing for divorce is smart. Often the worst divorce outcomes occur because one spouse possesses more information than the other one about family assets / property, and finances. There is a temptation in such cases for one spouse to hide assets, minimize values, and inflate expenses. The result: there is less property to share with the spouse who doesn’t know as much.

Here are seven (7) steps to protect yourself from having this happen to you.

1. Change your passwords.

As soon as you suspect there may be problems in your marriage and that you may separate or divorce, or even if you are seeing a marriage counsellor, change your passwords. This can save you a great deal of grief.

If you believe this would be an act of bad faith, stop. This is not about undermining your spouse. It is about levelling the playing field. You need to be able to gather information, without worrying about your spouse’s reaction. This helps you evaluate the situation, and make better decisions.

2. Gather information about family assets, properties, and debts.

Before the digital age, people kept paper copies of investment statements, bank statements, income tax returns, etc. This made gathering information easier. Now a different approach may be necessary.

For example, it may work to tell your spouse you want to have new wills prepared by a lawyer or attorney. If your spouse asks why, you might say that with all the news about covid, you have been thinking more about death. You want to ensure everything is prepared. Or if you had new wills prepared a few years ago, tell your spouse you want to name someone else as executor, or you want to leave your coin collection or jewellery to your sister.

The lawyer will ask you to complete an inventory of each of your assets and debts. Most likely, the lawyer will ask to see documents such as investment and pension statements, bank statements, and similar documents. Each of you will see these documents.

I have seen people in divorce rely on information collected for estate planning purposes to identify assets that must be shared. In other words, it is difficult for a spouse to say they don’t own a coin collection when details about it were shared with the lawyer when the wills were prepared.

When you are with the lawyer or attorney, this person may ask about life insurance. Use this as a springboard to have a discussion with your spouse, and to meet with a life insurance broker. This professional will ask each of you about your incomes, to calculate the amount of life insurance required. Once again, documents may be provided. This information will help protect you if your marriage ends and if your spouse does not want to share information with you.

3. Make a recording of what you and your spouse own.

Turn on the lights in your house, pick up your smart phone, and take photos of everything you own. Furniture, dishes, art, jewellery, bedding, books, collectibles, bicycles, skis, vehicles inside and out … everything. Or use your phone and shoot a video of each room and vehicle.

This way, if your spouse says later that your family never owned a quad or that the leather sofa was trashed before the marriage ended, you will have proof that they are lying.

4. Learn what the law says where you live.

In some jurisdictions, (states, provinces, countries), the law says that spouses must share equally all property they acquired during the marriage or spousal relationship. Other jurisdictions divide property “equitably” or fairly. Still others follow a more traditional approach: whoever paid for the property keeps it when the spouses separate.

The only way you can learn how property is divided where you live is to ask a lawyer. Google “legal coaching” and the name of your city to identify the names of lawyers or attorneys who will share this information, without trying to get you to sign up and be represented by them.

5. If you don’t have your own credit card, apply for one. Also, open your own bank account if all you have is a joint account.

Sometimes spouses are very nasty; they withdraw all the money from joint accounts and then close them. You need to be able to access funds if this happens. Otherwise, your options will be limited.

One way is to open your own account and to transfer money into it each month. Another way is to have your own credit card. When you apply, chose the option for receiving statements by email.

6. Review the Information You Gathered, and All Financial Disclosure from Your Spouse

Someone who is really smart isn’t going to refuse to give you information. Doing so makes the other person suspicious. Far better to share information. Here are some of the things you need to check:

  • If your family operates a business, you want to see three years of financial statements. Review these to see if there have been jumps in any of the expense categories (a good lawyer or a divorce settlement consultant such as Kim Korven could help you with this);
  • Look to see if the financial statements were reviewed pursuant to an audit, review engagement, or notice to reader (a CPA or a divorce settlement consultant such as Kim Korven ([email protected]) can explain the differences and what each one means);
  • Who prepared the appraisals? Namely:
    • Does the appraiser / expert have an existing relationship with your spouse or with your spouse’s family?
    • Was the appraisal of a building or a house prepared by a real estate agent or by a real property appraiser?;
  • Are the reports in final or draft form?
  • Has there been a new mortgage registered a house or building in the last year? Were you aware of this transaction when it happened?
  • Are there any unexplained withdrawals or transfers from bank accounts?

As you can see, there is a degree of expertise required in such an analysis. Don’t be afraid to seek help at this stage. It will help you later on.

7.  Ask one of your friends or a trusted family member if they will keep some papers for you.

When you find a trusted person who says yes, give them an envelope that contains:

  • a flash drive of the photos, videos, documents, and inventory you and your spouse completed for your wills,
  • paper copies of the documents you have gathered,
  • make copies of your identification (drivers license, health card and passport too), and
  • your new credit card.

This ensures your spouse cannot destroy the information you have gathered and ensures you will have access to money if this is necessary. It preserves options for you.

Conclusion

Not all divorces are ugly court battles. However, some are. Changing your passwords and gathering information does not mean a battle will occur; it means the playing field is much more level if one spouse is acting inappropriately. It shifts the power dynamics, and which creates the space for better discussions and financially fair outcomes.

If you have any questions or see the benefit in obtaining additional support, please reach out for a complimentary 20 minute assessment. We don’t have to live in the same place for me to be able to help.

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