Married couples are usually subject to a division of assets when they separate. The rules differ slightly depending on the province or area of residence, but couples who have been married for a long time or who have amassed most of their wealth together can be fairly evenly divided.
However, there may be other considerations, such as spousal or child support. Married couples about to retire or who are already retired may not be eligible for maintenance if their children are independent adults. Spousal support can still be claimed, but may not be as significant as it would be for a younger couple if one or both parties are about to end their careers or are no longer gainfully employed.
In some provinces or territories, common law couples are treated like married couples, but this is not always the case. Assets may or may not be split and other factors may affect support obligations.
Some annuities can be more difficult to divide than other assets that are easier to value. A defined contribution (DC) annuity is a mutual fund account that has a market value and can change with market fluctuations. A defined benefit (DB) pension that pays a plan member a specific monthly benefit may be eligible to pay a portion to each spouse; However, if the pension is split before the start of the payout, it may be necessary to evaluate the annuity based on complicated assumptions with a current value.
Anyone going through a separation or divorce should seek family law advice. Other professional advice regarding the tax implications of assets and income is also important as there is $ 100 in tax deferral paid RRSP Assets can be less than $ 50 after tax, so they can’t be compared to $ 100 tax-free TFSAs or $ 100 of tax-exempt primary residence property.
Working with collaborative family lawyers or mediators can produce the best and most efficient financial results for both parties. After all, divorce is not a zero-sum game where your partner loses when you win. The financial cost of legal advice and litigation can be significant and harmful to both parties, especially with limited assets to finance retirement.
Handling of fixed costs as a single pensioner
One of the biggest problems in divorce for retired and retired couples is that when you split your assets, you don’t necessarily have to split your expenses as well. A 50% reduction in retirement savings does not mean a 50% reduction in pension costs, and there are many fixed costs for a household, regardless of whether it is a two-person or one-person household. Divorced people may find that their expenses are still much higher than half what they paid as a half-couple, even though they only go away 50% of their combined marital assets.
Separation as part of your retirement provision?
Retirement planning is an important exercise for couples; this should be done long before retirement and especially as this phase of life approaches. Asking your spouse if they would like to separate may not be a common consideration in retirement planning, but it isn’t a completely unrealistic concept either.