Managing finances before and through a divorce
Divorce is always devastating. But for some couples, parting with their other half is easy compared to dividing income and assets fairly.
While some partners may have unrealistic expectations or simply aren't emotionally ready to settle up, others are dishonest and deliberately try to hide or deplete their assets.
Either way, the financial negotiations of divorce will be the largest financial transaction most individuals will ever participate in, says Justin A. Reckers, a financial planner who works with couples that have or are contemplating a split.
Most every divorcing person will prefer things, at least the financial side, to remain the same post-divorce as they were during their marriage. In reality, the pay cheque doesn't go as far when supporting two completely separate households, so everyone loses financially in divorce, he points out.
If you think your relationship might be on shaky ground, here are a few things he suggests you think about long before you knock on his door.
* Couples may have previously decided one of the parents should stay home to raise the kids at the expense of career development. The end results in divorce are child support, spousal support, and retraining to enter the workforce outside the home.
* Couples often make a joint decision not to purchase long-term care insurance because they plan to care for each other in the event they need it. When they divorce, the caregiver is lost.
* A couple may choose not to set aside funds for college education because they can afford to pay the expenses from cash flow when both are working. But with two separate households college becomes a low priority when even saving for retirement seems no longer possible.
* Partners may choose not to save aggressively for retirement because one expects a large inheritance to take care of things. In most circumstances an inheritance received after a divorce will only benefit one of the parties.
* A couple may decide to reinvest all of the profits from their small business back into growth instead of paying down a mortgage or saving for retirement. When it comes time for divorce, it is often not possible to turn that business into cash because a sale is not advisable.
Sound familiar? Knowing what you know now would you do anything differently?
By Gordon Powers, MSN Money
Posted by: Robert Beaudoin | Feb 5, 2022 4:23:02 PM
Hi, this is probably not the right forum to discuss RRSP, but since I couldn't find any other ways to get to you, here is my concern; for many years I contributed to my RRSP which I turned to a RIFF a few years ago. I understand the contibution made to RRSP are from before tax$$ as opposed to the contribution to TFSA are from after tax$$, so having said that, not everyones have employer that are offering to make the contribution with before tax$$, take the hourly rate employees for instance who are changing employers many time thought the year,as example the construction worker. I remember at the time when RRSP was first introduced my contributions came from after tax dollars, so having made contributions in those years from after tax$$, in another word I have been double taxed,(tax before and after)and there is no ways to remedy to this situation that as taken place so many years ago. I never seen any posting of a situation like the one I'm writing about, It would be beneficial to the not so informed person about RRSP taxation to avoid such a situation that can be still pratice in our days.
Please advised at your earliest convenience
R. Beaudoin.
Posted by: Answer to tax question | Feb 5, 2022 10:47:36 PM
Robert,
If you paid your RRSP with aftertax $$$, you would have received a tax credit when you did your tax return.
Posted by: Not quite | Feb 6, 2022 8:37:28 AM
Although you may not remember you almost certainly received some tax relief from those contributions you made, balancing the books tax wise. Tax bracket at the time and now would be a factor as to how well you fared but there's no double taxation happening.