What a Divorce can Cost You
Family Law attorney, Nazmeen Salfarlie, on money matters in marriage and divorce

If you can give one key piece of advice to a married couple on how money should be viewed and treated in marriage, what would it be?

Remember that you and your spouse are now in a partnership— and that also includes an economic partnership. As financial partners, you must both be vested with an interest to succeed and as such, decisions must be mutually responsible and in the best interest of both parties. The happiest couples I have encountered are those that understood and incorporated this idea of common plans and goals into their lives and strived to meet them. I promise this formula would bring comfort, security and ultimately, greater happiness to your marriage.

This does not mean that you cannot have autonomy and fun. One way to accomplish this, for instance, is to allocate a monthly stipend that each party may use at his or her discretion. I knew a couple that disagreed because the wife spent too much money on antique jewellery, and the husband on electronics. They resolved their problem by first being responsible about paying their monthly bills, then saving some of their money, and finally, whatever was left over was divided into two and allotted to individual partners to spend as they pleased.

What financial implication of divorce often comes as a surprise to women?

Firstly: the cost. Legal expenses can really add up. There are many laws that protect the non-monied spouse by holding that the monied spouse should be made to pay the pendente lite expenses, and ultimately, the entire legal cost. But in my experience, most attorneys are reluctant to commence litigation without a retainer. So be prepared to pay a retainer to your attorney up front.

Secondly, there’s the fall in the standard of living when the now single woman is cast into the role of sole breadwinner—paying the rent/mortgage, utilities, car payments, loan payments, groceries and other household expenses on her own.

Thirdly, the obligations of child care, once she becomes the primary caretaker or custodial parent, can also be a financial drain.

How does one financially prepare for divorce?

Ensure that copies of all financial records including cancelled checks, bank statements, tax returns, recent paystubs of both parties, receipts/invoices of expenses (such as for repairs to the matrimonial home) are in your possession, as your attorney would need these documents.

Also ensure that documentary evidence and history of asset purchases and payments such as deeds for the matrimonial home and/or ownership of cars, boats, stocks, shares, pensions, annuities, retirement benefits, and all payments made for mortgage, rent, clothing, school fees and child care, over the course of marriage, are also in your possession. Remember, anything acquired before marriage may not be subject to distribution, so the dates of acquisition are also important to note.

A good idea would be to make a list of all assets and take pictures of all of them where possible, including jewellery, art, coins, collectibles. Take pictures of jewellery before placing in safety deposit boxes. Do the same for shares, stocks and bonds. Also make a list of all liabilities, as all debts must also be divided upon divorce.

If it is your intention to prove that your spouse committed marital waste, or dissipated marital assets, you will be asked for documentary proof of this waste.

If you’re planning to get divorced, it’s a good idea to sever all joint accounts, or apply for an immediate restraining order preventing the other party from using any money from joint or business accounts except in the ordinary course of business such as to pay rent and/or utilities, purchase stationery, and so on, until the court decides how the money should be split.

In your experience, do couples more than often practice full disclosure when it comes to money?

No. I see many unhappy clients who trusted their spouse to handle all financial matters only to realize later on that he or she was mishandling the money, siphoning some off to family members or secreting some off to safety deposit boxes or private accounts or investments.

To prevent this from happening, please participate in the household money matters. It is more difficult for your spouse to siphon off money when you are watching closely. Even when there is no ill intention by your spouse, overlooking his or her handling of the family's money is being a true partner in marriage, and you may be able to assist with ideas and input and ultimately save some bucks.

I have known clients who complained that their spouses refused to participate in financial matters; this was extremely frustrating to them.

What do you think are the top marriage killing money issues?

Marital waste. This includes addiction to excessive shopping, alcohol, drugs and/or gambling. Even when there is no addiction, I have seen many marriages go under because one spouse refused to work out a common goal with the other and then respect that decision. Pitfalls include: not listening to the concerns of the other; not being responsible, and being spendthrift; hiding assets or money; hiding your wasteful spending habits.

For instance, one couple I’ve worked with, let’s call them Morgan and Rachel, fought incessantly over the excessive spending by the wife on shoes, clothing, jewellery and household items.

Although the husband complained, the wife never paid attention, and the relationship ended in divorce.

To what extent is a marriage union a business union? And where does one draw the line?

This is an excellent question and hinges on the first question asked above. A marriage union is also a business union. But we need to be particularly careful here, as marriage is not all business.

Marriage is about forgiving, loving, enjoying, confiding and caring for each other.

Do you recall a case where money was the core reason for divorce?

One case? Truth be told, if I see 10% domestic abuse, 10% infidelity, and 10% miscellaneous, I would see about 60% financial incompatibility.

Where a partner was unprepared, and did not receive the settlement due, what was the result?

A very unfair judgement, resulting in financial ruin. You must be involved in your finances. Keeping a lot of cash around and having a dishonest partner is a recipe for disaster. I once had a client whose husband kept cash in a safety deposit box. She always assumed that the cash was in the box. One day she found emails, which proved that he was having an affair with someone they both knew and who she trusted with all her financial information. When she went to the box, the money was gone. Her jewellery also disappeared and her husband had withdrawn all the money from their accounts to pay his own lawyers, and had secreted the rest, having not paid the mortgage on their house for months.

Whether or not to have a joint account is another contentious matter. A joint account works for many couples, but not for every couple. You need to follow your instincts and keep a separate account if you feel unsafe in your marriage. I tell clients who are contemplating divorce, or filing for divorce, that they could sever a joint account, but that they should only take half of the funds from it, all things being equal.

Don’t forget to keep evidence of your contributions by issuing cheque payments instead of cash. Cheque payments can be better proved later on.

Ensure that where the down payment on a house, for example, came from both parties, that both names are placed as title holders; and keep all the closing documents and cheques issued at closing.

Protect yourself, as people change and the unexpected happens.