When a couple separates, they need to calculate their Net Family Property in order to come up with an equalization payment. The first step is to calculate the property value of each party at the date of marriage and at the date of Valuation or Separation. Section 4(1) of the FLA defines the valuation date as follows:

• the date the spouses separate and there is no reasonable prospect that they will resume cohabitation;
• the date a divorce is granted;
• the date the marriage is declared a nullity;
• the date one of the spouses commences an application based on section 5(3) of the FLA (improvident depletion) that is subsequently granted; or
• the date before the date on which one of the spouses dies leaving the other spouse surviving.

Most of the time, when couples separate, the Valuation date is the Separation date. This said, that date can be open for negotiation especially when couples have lived separate and apart but in the same home for quite some time and have already separated all their financials (new bank accounts etc).

The good thing about mediation is that it provides couples a lot of flexibility and parties can pick and chose their date of separation if they both agree to it, as long as they fully understand the implications or repercussions involved.

Because assets, investments can go up and down from week to week, just look at the real estate markets in the last years or even the stock market in the last 4-5 months. Picking the wrong date may have a huge financial impact on your Net Family property therefore on you equalization payment.

A lot of clients think that the separation date is when one spouse actually leaves the home or family residence. The date of separation can definitely be that day, however if the spouse left the home or residence but continued to pay the same expenses as before, if they continued to have joint accounts with their spouse , if they tried counselling during that same period, if they even talked about being confused, needing some ”time apart” or a “break”, that separation date may not be applicable, as there may have been some hope, on the part of one or both spouses, of a possible reconciliation, which goes against what is outlined in Section 4(1) of the FLA.

The separation date you pick can have a considerable impact on the division of your family property. A mediator can help you pick the right Valuation/Separation date in order to protect your financial future and/or your children’s financial future.

It is quite normal and frequent to see one spouse in charge of most of the finances/investing and the other spouse in charge of the household, children’s activities etc.

As archaic or old fashion as this may sound, you would be surprised how many of my clients fit this profile. It’s not because one is necessarily better at it than the other, it’s just easier to split the responsibilities especially when one or both parties work full or part time jobs and we also know that too many cooks in the kitchen never works out.

This said, it doesn’t mean that because you are not responsible for the bills/ investments that you don’t participate in the financial decisions that impact your family or that you don’t show an interest in where the money is spent or invested.

How many times have you heard or seen elderly couples where the husband or wife dies and the survivor spouse knows nothing about their financial situation, doesn’t know where the money is, no idea of the passwords, no idea of the debt load, doesn’t know how to pay the bills, where or with whom they do all their banking…

 The same applies for Separation and divorces. Often the spouse who was not involved with the money ends up completely in the dark as to where the money has been spent, where it was invested or how much of it is currently available. This becomes complicated and can also be very expensive when mediators or lawyers need to calculate their Net Family Property, as spouses need to rely on each other to produce “full financial disclosure”. Some of it can be “traced” but some or a lot of it can be hidden. It’s finding the hidden ones that can be extremely costly, as this requires hours of investigations, sending subpoenas to financial institutions, or hiring experts, such as forensic accountants, financial advisors etc…

Let’s face it, when your marriage breaks down and especially when you have been hurt or betrayed, when you have worked your entire life for your pension/retirement, you may not be so inclined to give it all up, especially to the person who caused you this hardship. Temptation may often greater when you know your spouse is completely unaware of the family financials.

How to avoid this situation, to all the couples out there, young and “older or wiser”  I say, there is nothing wrong with sharing responsibilities just make sure you make time to sit down and talk on a regular basis about finances, meet with financial advisors together to discuss your family’s short term or long term financial goals and future. Make decisions together, be aware and even if you are not interested or could not care less about money or numbers, at least be informed so that you are prepared if something happens whether it be a sickness, a death or a separation/divorce. Do it for yourselves but also for your children.

Getting informed, involved or simply being aware of your family’s financials will save you a lot of pain, money, stress and will hopefully also help you preserve relationships later.

One last thing, never, ever sign documents or agree to anything whether it be verbally or in writing, unless you did your homework first, always talk to a mediator, lawyer or financial advisor first. Signed documents are legally binding, beware of texts, emails, voice mails as they can also be held against you later in mediation or court litigation.

• Some say that “it takes family members on average approximately four to eight years to recover from the emotional and financial expense of a bitter divorce”. The problem with litigated divorces, in most cases, is that there is no possible resolution of the emotional issues, how can there be? Well, it’s easy, you are not even doing the talking or negotiating your lawyers are, which not surprisingly most often results in a decrease in trust and an increase in resentment towards your ex.

• As a mediator, my goal is to try my best to educate people on the benefits of mediation. Unfortunately, when people separate the first thing that pops in their mind is “I better get a lawyer” rare are those who say, “I better get a mediator”.

And that’s quite unfortunate because mediators can:

• – save clients thousands of dollars in legal, medical, psychological & emotional costs (Lawyer, psychologist, doctor (pills).
• – focus parties on creating the best possible future for themselves and their children by guiding them through brainstorming sessions and coming up with the most “out of the box” options tailored to their needs and those of their children.
• – help parties feel understood by allowing and encouraging them to express their feelings, concerns and fears.
• – help parties transition from a “spousal” relationship to a “co-parent” one.
• – empower clients by providing them the tools to be at their best not their worse (communicating, cooperating and making compromises).
• – help parties take ownership of their future by making decisions for themselves & their children rather than having courts or judges impose their own judgment
• – help parties create a clear and comprehensive roadmap of their future by creating a Parenting Plan that is focussed on the best interests of their children.

And finally, mediators can help parties look back at this whole separation process with a feeling of accomplishment of being capable of raising above their pain, anger, sadness to focus on what was important for them and their children, all this while keeping their dignity and self-respect.

• Try mediation what do you have to lose….

So many people don’t think of their pension as being an asset and unfortunately quite often, they also don’t realize its true value until it’s too late.

A lot of my clients who have pensions, don’t know the type of pension they have and often have no idea of what they are worth.

Most work Pensions Plans I deal with fall into 2 categories; The most traditional one and the one people usually care the most about is:

1.The Defined Benefit Pension Plan:

This is a company plan where the employer promises to pay the retiree a specific monthly benefit on retirement for the rest of his or her life. The monthly benefit amount is calculated using a formula that considers the employee’s earnings history, the number of years of service and the age of the employee. Air Canada, the Federal Government, Teachers, Police Associations are examples of employees that often have DB pensions.

The other pension plan, which is the one most employers will offer these days as the investment risk is shifted to the employees, is:

2. The Defined Contribution Plan:

This is where the employer, employee or both make contributions on a regular basis.[1] Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings. (Wikipedia)

I have a lot of clients that think these 2 types of pensions are similar in the sense that they believe the value of the Pension is based on the Pension Statement they get every year. But the reality is that contrary to the DC pension statement which reflects the actual value of your pension, the DB Pension Statement only represents a fraction of the total value of your pension. I have clients that thought their pension was worth $75,000 until they had a valuation done by their Pension Provider and they discovered that it was worth $350,000.

The only way to get the true value of your DB pension is to fill out an “Application for Family Law Value” and send it to your Plan Administrator who will then provide you with your “Statement of Family Law Valuation”. You also have the option for a small fee to get an “Estimated Family law value” through an actuary. These are 2 ways I personally know to obtain the value of the pension assets you accumulated during your spousal relationship, there may be others.  

Not my Pension!!!

When a couple separates and is ending their marriage, their financial future is a huge stress and for so many people a Defined Benefit Pension is 🥇 GOLD , it’s the one thing they thought they could count on, as it always represented a guaranteed income for their whole retirement life. Having worked all their life and having made so many sacrifices often at the expense of their health, their friends, and often their relationships with their partners or children, you can imagine that having to share this safety net with their future ex-spouse is quite devastating and not part of their plan.

Here are the 2 most frequent questions I get regarding Pensions:

1- Do I really have to give half my pension to my ex?

Yes, your ex-spouse is entitled to 50% of the value of the pension you accumulated during the years of marriage. VALUE being the key word here. A lot of my clients think that they need to split their pension in half right now and that their spouse will get the amount in cash or that they will automatically lose half their pension when they retire. What they don’t realize is that pensions are like any other asset;

·        They can be traded off for something else, “you keep the house I keep my pension”.

·        They can be excluded in the calculation of your Net Family Property, as long as their true value has been disclosed (Full financial disclosure)

·       Their value can be considered in the calculation of their Net Family Property as part of their assets but depending on their debts they may not represent that much in the end. If for example, you have a $350,000 pension but you owe a mortgage of $400,000 your Net Family Property would be -$50,000 which means the value of your pension is not as significant here.

2- Why do I need to share my pension at all, I worked hard for it, I am the one that did those crazy hours, worked 7 days a week….

First of all, your pension in the eyes of the Law is considered to be a marital asset, just like a bank account where you accumulated savings during your marriage or investments that increased in value. Secondly, it is assumed that while you were doing all these crazy hours, your partner or spouse was taking care of the children, your home, paying the bills, making the meals, running all the family errands, going to school PTAs, driving the children around etc…This was a partnership you both agreed on and therefore you should both share in the profits.

Now this is a very simplistic way of looking at things and there are other factors to consider, your partner’s assets and debts, your joint assets and debts, your pre-marital assets, excluded property etc. But what I’m trying to get at is that, before you start panicking, before the exchanges with your ex-spouse escalate into high conflicts and points of no return, you should contact a mediator who can provide you a much more detailed picture of your respective financial situations, what your rights are, what your options are and what the Family Law in Ontario stipulates regarding Pensions.

Now, I still believe that there is a way to avoid all this and to secure a happy retirement, the best investment you could make is to never stop working on your marriage.

For more details or if you need any help with your Separation and/or Divorce please contact us at helenerivard@mediate2agree.ca or check our website www.mediate2agree.ca

 Mediation is always the best solution!