Canadian Public Blog

FAQs: Separation and Divorce

Publish Date: 07/06/2018


Q: Do we have to go to court?

A:  Only if you can't reach an agreement—less than 5% of family law cases go to trial. Speak to your family law lawyer to discuss what alternatives to court are best suited for you based on the specifics of your case. There are a number of options available, including collaborative practice and mediation.

Q: How do CDFA professionals help?

A:  Certified Divorce Financial Analyst® (CDFA) professionals have specialized training and skills that enables them to analyze various settlement proposals in their long-term context, projecting out 5, 10 or even 20 years, to help clients determine the short- and long-term impact of any proposed settlement. They also provide valuable information on the financial issues that are related to separation and divorce, such as tax consequences, dividing pension plans, insurance needs, and much more. CDFA® professionals also assist lawyers by helping the client make financial sense of various settlement proposals. In addition, CDFA professionals give lawyers the tools that they need to help prove their case through the use of charts, graphs, and financial plans.

Q: Should a separating person hire a CDFA professional instead of a family law lawyer?

A:  Definitely not! The Institute for Divorce Financial Analysts (IDFA) highly recommends that any person going through a separation or divorce seek legal counsel. The CDFA professional's role is to assist the lawyer—not to act in place of one.

Q: Do CDFA professionals help only men or only women?

A:  CDFA professionals are trained to advocate for both men and women. The CDFA professional simply interprets the financial data and helps the lawyer build a strong case that is in the best interest of the client.

Q: Can CDFA professionals act as a neutral third-party to help a couple reach a settlement?

A:  Many CDFA professionals are also trained mediators or collaborative professionals who can take on a neutral role to assist both parties in a facilitative mediation or collaborative process. However, most CDFA professionals are not also lawyers, and they cannot give legal advice. The IDFA always recommends that any person going through a separation or divorce obtain legal advice.

Q: How is a CDFA professional different from other financial experts?

A: There are many designations for a financial expert, including: Certified Financial Planner® (CFP®), Chartered Professional Accountant (CPA), and Certified Divorce Financial Analyst® (CDFA®).

The role of the financial planner (CFP®, PFP, RFP) is to help people achieve their financial goals regardless of whether they are divorcing or happily married. After determining the client’s goals, the next step is to take an inventory of current assets and liabilities, and then the planner looks at what needs to be done to achieve the client’s goals.

Conversely, an accountant (CPA, CA, CBV) typically looks at the details of the scenario as it is today and makes no future projections. During a separation, they are hired to calculate the tax effect of dividing property and the effect of spousal and child support for one or two years. They typically do not project further into the future. They may also be retained to perform an audit of account activity or to perform forensic accounting functions to help find "hidden assets."

To best meet the needs of divorcing couples, you need a blend of these two ideologies; the CDFA designation was created to fill this need. The role of the CDFA professional is to assist the client and his/her lawyer to understand how the financial decisions he/she makes today will impact the client’s financial future based on certain assumptions. That way, the client can make informed decisions about his/her future.

Q: What about the house? Should I keep it?

A:  This is a great question. The answer is sometimes yes, sometimes no. It's important to pinpoint exactly what it will cost to maintain the home, factoring in taxes and insurance. The next step is to analyze if there is enough money coming in to stay comfortable in the home—in other words, pay the bills each month and keep the house in good repair. Once that has been determined, the advisability of retaining the home must be compared to the advisability of giving up other assets, such as liquid accounts, retirement plans, etc. Finally, all decisions need to be weighed against the cost to secure alternative living arrangements. CDFA professionals are trained to help people answer this question before they commit to a financial settlement that cannot be changed.

Q: What if I brought a house into the marriage that was in my name only, but after we married, I added my spouse's name to the deed?

A: In this case, the whole house could be considered marital property. You might have made a "presumptive gift" to the marriage and should consult with a family law lawyer to discuss your options. In some provinces and territories, if your spouse moved into this house, and both of you lived there during your marriage, the house is marital property no matter whose name is on title to the home. You need to discuss your unique situation with a family law lawyer.

Q: Will I lose some or all of my pension?

A:  Generally speaking, pensions and retirement plans are marital assets with the portion that was earned during the marriage being subject to division. However, depending on the province or territory that you live in, the portion that was earned prior to marriage could also be considered a marital asset. It may be possible, however, to keep your pension intact and have the value of the pension offset with other assets.

Q: Is my RRSP considered marital property? It's in my name only.

A:  In most provinces and territories, assets acquired during the marriage, no matter whose name it's in, are typically considered marital property. In some cases, depending on the province or territory, the increase in value of separate property could also be considered marital property. Be aware that there are tax considerations to be made in determining the value of the RRSP, as well as a little-known window of opportunity to transfer registered retirement accounts without triggering tax consequences. Talk to your CDFA professional about your options.

Q: How do we figure out how much child support should be paid?

A:  All provinces and territories have mandated child support guidelines. For child support claims made under the Divorce Act, there are federally regulated guidelines called the Federal Child Support Guidelines. Generally speaking, child support is based on these factors:

  • Age of the child;
  • Physical custody; and
  • Income of the payor, or in the case of shared or split custody, both parties.

While there are guidelines in place, determining the amount of child support can get tricky—actual income, allowable deuctions and a number of other factors must be considered. For example, in the case of a payor who is self-employed or an independent business owner who can control their wages, determining income can be complicated. In this situation, it typically helps to bring in an expert, such as a Chartered Business Valuator (CBV), who can help determine the true income in accordance with the Guidelines.

In some cases, the guideline amount of child support may not cover all of the child's actual costs—for instance, medical and dental expenses not covered by insurance, private school , post-secondary education tuition, or extracurricular activities. Speak to your lawyer about the possibility of increasing the guideline amount to cover any special or extraordinary expenses.

Q: Will I receive spousal support?

A: The tests for spousal support (also called "maintenance") are complex and no two cases are the same. You will need to speak to a family law lawyer in order to determine how the specifics of your case may impact your entitlement to receive spousal support. Once entitlement has been established, the factors to be considered to determine the amount and duration are: 

  • Need. Do you have enough money to live on? This would include income from employment, earnings from investments, and other property.
  • Means (ability to pay). Can the payor afford to pay what is needed and still have enough to live on to support a reasonable lifestyle? 
  • Length of cohabitation. A short-term marriage, without children, may not qualify for spousal support whereas a long-term marriage (20 years or more) may qualify for indefinite support.
  • Age and health of both parties.

Again, no two cases are the same and there are a number of factors that come into play when determining entitlement, amount and duration. It is always recommended that you seek independent legal advice on this issue.