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Divorce: Financial Guide

Navigating the money side of separation — with compassion and clarity.

💛 This is hard. You're not alone.

Divorce is emotionally and financially overwhelming. This guide won't make it easy, but it will help you understand the financial steps so you can protect yourself and move forward.

First Steps: Protect Yourself

  1. Gather financial documents: Tax returns, bank statements, investment accounts, mortgage papers, debts, pay stubs
  2. Open your own bank account if you don't have one in your name only
  3. Check your credit report — know what debts are in your name
  4. Don't make major financial moves without legal advice (emptying accounts, selling property)
  5. Consult a family lawyer — many offer free initial consultations

How Assets Are Split in Canada

Canada uses "equalization of net family property" — meaning the increase in each spouse's net worth during the marriage is split equally. Rules vary by province:

  • ◆Matrimonial home: Usually split 50/50 regardless of whose name it's in
  • ◆RRSPs & pensions: Growth during marriage is split. Transfers between spouses are tax-free during divorce
  • ◆TFSAs: Split based on provincial rules
  • ◆Debts: Joint debts are shared; individual debts may remain with the person who incurred them
  • ◆Common-law: Property rules differ significantly — legal advice is essential

Child & Spousal Support

  • ◆Child support: Calculated using federal guidelines based on income and number of children. Not optional.
  • ◆Spousal support: Depends on length of marriage, income difference, and circumstances. May be temporary or ongoing.
  • ◆Tax treatment: Child support is tax-neutral. Spousal support is taxable for the recipient and deductible for the payer.

Rebuilding Your Finances

  1. Create a new budget based on your single income
  2. Build (or rebuild) your emergency fund — aim for 3-6 months
  3. Update beneficiaries on ALL accounts (RRSP, TFSA, insurance, pension)
  4. Update your will immediately
  5. Notify the CRA of your marital status change
  6. Cancel joint credit cards and accounts
  7. Build credit in your own name if needed

Canadian Resources

  • ◆Legal Aid: Free or low-cost legal help available in every province
  • ◆Family Justice Services: Government mediation and information services
  • ◆Credit Counselling Canada: Free help with budgeting and debt management
  • ◆211: Dial 2-1-1 for local support services

🍁 Canadian Pro Tip

RRSP transfers between spouses during divorce are tax-free if done through a court order or separation agreement. Without proper documentation, the transfer could be taxed. Always get legal advice before moving retirement assets.

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