Separation is Like an Iceberg, What you Don't See can Hurt You.

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by: Colin Kennedy
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Date: Sat, 26 Feb 2011 Time: 8:11 AM
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After the wedding bells fall silent and baby cries fill the air - you may only see the tip of the financial berg. When separation or divorce is staring you in the face, it is time protect yourself. It's time to stick your head in the water and see what lies beneath.

If you are a 25 year old white male with a university degree and no kids, then your exit strategy is as plain as your acne. A stay-at-home-mom-with-two-kids-in-diapers-and-no-money-of-her-own has a different set of problems. If your soon-to-be-ex is clamouring for your money, then you too would be wise to use a separation agreement. And before you start to fill it in and present it for his/her signature learn all you can about your money situation, and don't rely exclusively on information from your ex. As related in Things That Go Wrong With Divorce you may find yourself being manipulated by misinformation.

Pensions
Company pensions are often matrimonial property, but some pensions are closed. If your pension(s) are matrimonial property then your spouse may have a claim on part of your pension. Pensions are retirement income, and if your ex has a valid claim then his/her portion is set aside for when he/she reaches retirement age. The company pension administrator needs to be informed of your change in marital status even if no claim on your pension has been made. If there is a claim then don't try to work the numbers yourself, contact your admin person and he/she will do the calculations.

I agree that only an accountant would find this stuff sexy. If you want to see my writings about sex then read When Lust and Love Becomes Fight and Flight.

Real Estate
Think of marriage as a business partnership. You ceremoniously form a legal entity, you both bring assets and skills with the intent to grow and prosper.

When your partnership is about to dissolve you prepare to divide the spoils. Normally the value is calculated from the day you started living together to the day you split. When you divide your assets and liabilities it is usually 50-50. Your rights to the matrimonial home are protected, and it does not matter who is on title, and it does not matter if you are now living elsewhere. Neither party may sell or refinance the matrimonial home without the others consent.

Have a third party give you a fair market value. You can hire an appraiser, or a Realtor. The appraiser will charge a fee, and the report is accepted in court. The Realtor may do a free market assessment which may suit your needs. Both professionals use the same methodology of comparing your home with other similar properties that have recently sold. Caution: put little weight on expired listings or property which has been listed for a long time - these are often overpriced.

You have three options.
1. You can do nothing for now.
2. You can sell the property, and after adjustments split the profits.
3. One can buy the others' share. Which brings us to the second important thing about property.
You need a real estate lawyer to handle the legal end of selling to a third party, or the legal end of buying/selling your share.

Lawyers and your money.
You either love your lawyer, or learn to hate dealing with them. Time to bring out the iceberg again because lurking below the surface are hidden costs. Hidden fees are numerous; it will cost you money just to call the office. Please remember the lawyer is not paid for your successful divorce, the lawyer is paid for time.

Ask for a flat fee, so what you see is what you get.
Do your own homework, and know your rights and know what you want.

If you have taken advantage of the free separation agreement you have already saved about 3,700 of your after-tax dollars.

Decide if you actually need a lawyer, and if you go the lawyer route leave your tears at the door, why pay $300 an hour to use the lawyer's box of tissue?

"There are so many rules and so little time to ponder them. I had better stop because I cannot bill my client for these thoughts. Or can I?" ( Delfman, Bruce. The Rule in Jimmy's Case.)

Dealing with the Courts
Separation does not need court intervention unless you are seeking an order for child support. When your agreement is signed and witnessed it becomes legally binding and does not need to be registered; however, you will file it as part of a divorce, or the mortgage holder or even the utility company may need to see your separation agreement to make administrative changes.

To legally end your marriage you need to deal with the courts. Today the courts aren't concerned with who did what, or how bad things were, the court deals with facts and tons of paperwork. Your experience in court can be smooth and quick if your papers are in order, or it can be a lengthy nightmare if there are errors. The court clerks are busy with all kinds of legal paperwork and have little sympathy for mistakes, nor can they give you legal advice.

All in all it's not a great trip, but soon enough all will be well.

About the Author

Colin Kennedy is a divorce specialist helping people with separation and to divorce without lawyers. A a trusted authority providing free information, see him at www.CanDivorce.ca and at MySpousalSupport.com