Here’s How to Protect Your Finances from Divorce and Cheaters

The last thing you want to think about when you tie the knot is the possibility that your union might not last. Statistically speaking, there’s a good chance that you’ll get divorced. According to Butterfield Law, between 38 and 41% of Canadian marriages end in divorce before the 30th wedding anniversary. Divorce or the dissolution of a civil union not only takes an emotional toll but can be financially devastating too. It’s best to be prepared for the possibility. Here’s how to protect your finances from divorce and cheaters.

Divorce Statistics In Canada: A Snapshot

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Have a prenuptial agreement

Before you get married, discuss with your partner how you will divide your assets if you get divorced. Then have a lawyer draw up a prenuptial agreement or marriage contract that covers this as well as how the terms of the contract will change if one of you cheats. Of course it’s not very romantic but if there’s one thing the most expensive celebrity divorces has taught us regular folk, it's that some kind of prenuptial agreement can save you a lot of pain — and money.

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Know what the rules are in your province or territory

While the Federal Divorce Act governs all divorces in Canada, each province or territory has its own rules too. Find out what the rules are in your province or territory: most provincial governments have websites where they explain family law in that province or territory. You can also hire a family lawyer to explain the details of the divorce process and protecting finances to you.

RELATED: marriage problems? Experts reveal 20 warning signs it might be time for a divorce.

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Know your net family property

When you get married, find out what your net family property is on the day of your wedding. Net family property refers to all the assets that you and your partner own separately and together, as well as all your debts. This amount tends to change over time, as you buy a home and accumulate other assets. So, have documentation to prove how much you brought into the union financially speaking and how much you’ve contributed over time. This will help you negotiate a better settlement than simply splitting everything 50/50 when you get divorced.

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Have your own bank account

If you own a joint bank account with a partner who cheats, you may lose a lot of money when that partner goes into debt or overspends. Debts and bad cheques may even affect your credit rating. To protect yourself, open your own bank account and get one of the best credit cards in Canada. Some couples go a step further by having separate bank accounts right from the start, with a joint bank account for household expenses.

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Close your joint accounts

When divorce is imminent, it’s wise to close your joint bank accounts sooner rather than later. Split the balance between you and your partner so that you can each deposit your share into your own, separate accounts. Also discuss how you will deal with existing debts and let your creditors know about the new arrangements for paying these debts.

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Build a good credit record

With a joint bank account, you will be liable for your partner’s debts and this will affect your credit record. So, keep your credit on your own accounts impeccable. This will come in handy when, after the divorce, you need to apply for a loan for a new home or other expenses. The first step in having a good credit rating is to reduce your credit card debts.

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Consider downsizing your home

The legendary serial divorcee Zsa Zsa Gabor once said, “I am a marvellous housekeeper. Every time I leave a man, I keep his house.” While a house is a valuable asset to keep in the divorce settlement, it can be difficult to pay for its upkeep on a single income. Consider downsizing to something more affordable and using the profits from selling the marital home for other expenses.

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Adjust your budget

After the divorce, you’ll have the sole responsibility of paying your bills. Take stock of your new financial situation and look at how your lifestyle has changed now that you’re single again. Then draw up a new budget to reflect these changes, and live within that budget. After all, living beyond your means is one of the first signs that you’re going to retire broke.

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Have a detailed separation agreement

Hire a lawyer who has your best interests at heart to negotiate a fair divorce settlement. Then have a detailed separation agreement drawn up. This agreement should cover any possible future eventuality, such as how to adjust child support payments to cover your children’s changing needs. This will save you from having to go back to court and paying more legal fees in future.

SEE ALSO: why Canadian women need to save more money than men for retirement.

Mother and child looking at important documents

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Change your will and insurance policies

Your partner has likely been named as a beneficiary in your will and insurance policies. Now that you’ve split up, you may not want your now ex to get all your hard-earned assets if something happens to you, especially if he or she has been a cheat during your union. Get legal advice on how to change your will and update your policies so that the money will go where you want it to, without being in breach of your separation agreement.

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