7. Get a separation agreement
Critical in that process is discovering your child and spousal support entitlements. "There are support guidelines, and you have to pay or be paid," says Anne L. Moxley, an Ottawa-based divorce lawyer. "But you can't enforce them unless there is a separation agreement or court order." In other words, whatever your entitlement (child support is based on access, spousal support on income and number of years married), establish it as soon as possible. Regardless of who gets the lawn mower, you should write a partial separation agreement for support, to ensure a steady flow of income. To learn more, visit www.justice.gc.ca and search for "federal child support guidelines."
What happens to my… ?
RRSPs
According to Anne L. Moxley, an Ottawa-based divorce lawyer, splitting RRSPs in the separation shuffle can be done two ways. "You can do rollovers so they're equalized on both sides and you both walk away with the same amount," she says. For example, if one spouse has $20,000 in RRSPs and the other spouse has $10,000, the spouse with more will give the other $5,000 so they are both even. "Or you can keep yours as an asset, subtract the tax liability, and mix it with other things to create a fair split."
RESPs
If you contributed to your child's education savings plan before separation, RESPs are not calculated in the assets being divided. If you contribute after separation, they are credited to your side as post-secondary support.
House
The decision to keep your house depends on custody arrangements and finances. "There's no hard rule," says Moxley. "It's just what works." The law says it is an asset with special status and therefore owned fifty-fifty. If you want the house, you have to buy out your ex or use it in an equalization calculation, which is done through your lawyer.
Pension
Usually, an actuary calculates the value, which is considered an asset. Pensions can be legal nightmares to contend with because they involve an estimated future value. Sometimes they are split, sometimes they are equalized.
Will
"The law says that once you divorce, any provisions in your will for your ex-spouse will be revoked," says Moxley. Still, reviewing your will is important
Read more:
• A single mom's best-kept secret
• The meaning of "mom"
• Finding a healthy balance: The single-parent formula
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| This story was originally titled "Financial Strategies for the Single Mother" in the May 2009 issue. Subscribe to Canadian Living today and never miss an issue! |
