BMO Report: Canadians Underestimate Financial Impact of Divorce

The Bank of Montreal, in a study reported in Marketwatch last week, reports that while over 100,000 Canadians divorce every year, very few of them appreciate the financial impact resulting from the divorce.

In the study, prepared by Leger Marketing, respondents were asked how they felt divorce would impact them.

While 41% responded, as one might guess, that family life would be impacted by a divorce, only 19% reported that they felt their finances would be impacted, and even less, 14%, felt that their standard of living would be impacted.

Those of us who practice divorce could have easily provided the same advice.

How many people come to us, eager to move out of a difficult marriage, but blissfully ignorant of the serious impact that divorce will have upon their finances and their standard of living?

Couple that with anger and frustration with their spouse - and you have a perfect storm for litigation as spouses seek to deny the inevitable - that THEIR lifestyle will suffer when you take two people who had been sharing their finances and now create two separate homes.

Over and over we see spouses refusing accept the reality of their support obligations, or conversely, who refuse to accept the limitations of the other party's support obligations - leading them to Court where, quite often, both parties are left dazed and confused as their financial problems are amplified now by significant new debt in the form of significant legal fees.

So, then.

Time for a reality check.

If your finances aren't perfect when you are married, what makes you think that they are going to get better when the two of you now acquire a second home, a second set of utilities, and all the other expenses that are duplicated in two homes?

Add to that the need to furnish the new home.

Add to that the costs of legal representation.

I think you see the problem.

Can you avoid the financial pain often inherent in divorce?

No.

But you can control the bleeding.  You can reduce your risk through, firstly, accepting the reality that assets are going to be divided, that finances are going to be reorganized - which will create discomfort.

Then - through the use of Collaborative professionals, including lawyers, counselors, and financial advisors, you can create a plan to minimize risk and loss.  Put down the guns and pick up the pencils.  Figure out a plan which represents a reasonable compromise for both parties.

Whether your divorce is in Lethbridge,  Calgary, Edmonton, Lloydminster, or anywhere else in Alberta - there are Collaborative professionals who are ready and willing to help you put the pieces back together as much as possible.

Or you can pretend that the "divorce fairy" will make everything better - that you won't pay any support, or that the support you receive will be more than enough to maintain the lifestyle that you had before.

And then get ready when reality later crashes in - accompanied by thousands of dollars in legal bills.

Your choice.