Steps to Financial Separation
Preparing for Financial Separation
Often one person in a relationship has taken primary responsibility for financial management and record keeping. In preparation for separation it is important for the other parent to bring themselves up to speed on the family’s financial matters by:
- Reviewing the specifics of all financial accounts
- Making copies of all relevant documents and computer files with financial data
- Beginning an inventory of all separately- and jointly-owned assets
- Making a list of all outstanding debts
- Meeting with a financial planning professional to discuss the financial and tax implications of decisions that will need to be made as the separation goes ahead
- Obtaining information about separation and property division laws
- Establishing credit in your own name
Basic steps to separate finances
Resources
There may be some tax consequences in the selling of property.
Consult a financial advisor or an accountant for advice on how to manage your property division.
DIY
You can fill out the Family Inventory Worksheet and the Excluded Property Worksheet to determine how much each of you are entitled to.
Resources
- To learn more about property and debt issues that arise when separating see the Family Law in BC , JP Boyd and Dial-a-law websites.
During Separation
You should be moving toward separating the financial ties with the other parent. You should act promptly to:
- Close all joint credit cards or other lines of credit;
- Separate bank accounts; and
- Manage debt.
The goal is to create two financially separate households from one.
- Take your personal documents — such as your birth certificate and passport — out of a joint file and create a new file for yourself.
- Review your insurance policies.
- Negotiate agreements about guardianship, time spent with the child, child support, spousal support, and property division.
- Decide who will take the dependent tax exemptions for children, and who will claim the Child Tax Credit and the BC Family Bonus so that each parent can file their tax returns without additional complications.
Resources
The date of separation can be very significant, it can be used to determine:
- When the spouses become one-half owners of the family property and the family debt
- If a particular debt can be considered a family debt or a particular asset can be considered family property
- Each entitlement to pensions
Decisions about property
After Separation
It’s time to wrap up the details of the relationship. If there has been a name change, this needs to be communicated to financial institutions, business service providers and others to make the change on legal, financial and business documents as needed.
At this time each parent needs to:
- Contact their employer to make changes to benefits as needed. Replace any lost protection.
- Consider changing beneficiaries on policies unless there is an agreement otherwise
- Review their will and other estate planning documents.
Until the children are living independently and no longer require financial support, child support will remain an ongoing topic between parents.
