Divorce and your money: How to protect yourself

Divorce is almost impossible to prepare for and can take years to recover from, both emotionally and financially. But with about 40% of marriages ending in divorce, it's something many Canadians have to go through.

I sat down with Zeljka Walker-- she's a Certified Divorce Financial Analyst and Investment Advisor at TD Wealth-- to talk about how to survive a divorce with your finances intact. And she shared some professional and personal insights.

Yes, absolutely. This is one of the reasons why I decided to kind of specialize in this area, is I have a Certified Divorce Financial Analyst designation. And the reason how that came about is, I actually experienced this myself.

I went through a horrible, nasty separation, divorce, where my ex is actually taking me for almost everything I had. I was a single mom at the time, going through emotional-- all kinds of emotional roller coaster. And I vowed at that point, I'm going to educate myself, learn more about how I can avoid this. And it kind of brought up that passion about specializing in the divorce market and helping others see what they can do to kind of avoid any pitfalls.

Tell me about some of those pitfalls. When you deal with clients-- and let's start with some of the female clients that you've dealt with-- what are the kinds of-- because I think we could talk about it generically, but this is real life. So what are some of the things that can happen?

Well, I have some real-life situations that have occurred, and even sometimes surprises me. So I have, for example, one female client. She had no clue that her husband decided to take a line of credit on the equity of their home.

And he ended up buying a condominium and a property, we suspect for his new love interest, and also spent money on buying a luxury car. She had no idea. And now they're both on the hook for the liability that was taken out of the mortgage.

So that was shocking for her. But I was able to identify that with her. And another one, even more so shocking, is when we're looking at registered account and one of the RSPs for the husband. The beneficiary name was changed to another woman.

And that's how she found out he was having an affair. No clue. And she said, that is not me, and who is this woman? So those are some of the things that we kind of encounter and discover, going through statements and reviewing things with clients. Those are just two female ones I can think of off the top of my head.

Those are heartbreaking. And obviously, you find out a lot of things when you actually start investigating where the money is flowing. I know that's the one thing.

What about men? Because this is not something that just happens to women. This goes both ways.

Yes, it does. Absolutely. I have a male client that this has happened to. And he was shocked to find out, again, by looking through statements and educate him what we're looking at, we discovered, in this particular case, one of his investments. It was a bond that matured. And it was cashed out. We saw the date when it was going to mature.

And the cash disappeared. And at the same time, looking at other bank statements, we've noticed other transactions and that there was a safety deposit box fee going through. So you put the two together, and you found out she was hiding money in a safe deposit box at a separate bank.

And that was not part of the argument and negotiation for the divorce. And she started spending money like mad on the credit card.

So many stories. I think these are great cautionary tales for people to say, if you think something's up and if you're headed down this path, maybe you should start thinking about doing a few things. So let's talk about that. Let's say that a couple decides that they're going to be separated. What should happen then?

Well, if they have the conversation, then, depending on the relationship that they have, they can either both decide to do a separation agreement and decide what direction they're going to go. But if you're on your own and you're don't want to deal with your spouse, you want to start preparing yourself.

So I always recommend start collecting all documentation that you can. Find out where your bank statements are, investment accounts, beneficiaries on pensions, life insurance policies, wills-- all that kind of documentation. There's a whole list of things that they need to kind of be aware of.

Best to kind of talk to some professionals that can kind of guide you through it, because do remember, it's an emotional time. And going through any separation, it's highly-- you have a high state of emotions at the time, and mostly anger.

You might miss a lot of things. So if you sit down and speak to a family lawyer or other specialist, advisors that specialize in divorce, for instance, accountants, even therapists-- but make sure you have a support system there for you, along with family and friends.

Yeah. And the discipline and the structure to make sure you're doing the right things.

Correct.

What about once a couple is divorced? What are the things you need to keep in mind?

Well, once they're divorced, usually a settlement is done. And you've kind of both agreed what's happening. But a lot of cases, there's still ongoing issues happening. And there's still things you need to be aware of, because changes can occur.

I would recommend continue to make sure your life insurance policy up to date. Even have a spouse that decided to stop paying premium. And all the sudden, it's void.

You want to make sure maybe some pensions that you've arranged, do they change anything along the lines? So you just kind of have to keep up with what's going on, communicate if you can, but continue letting your advisors know what's happening so they can kind of guide you.

Zeljka Walker joining us from TD Wealth.