So you’re separating. Here’s how to navigate the money part — and move on with your new life

Last week’s very public announcement by Prime Minister Justin Trudeau that he and his wife Sophie Gregoire are separating, shone a light on an issue many married Canadians will have to deal with.

The financial and emotional implications of separation and divorce can be complicated.

But, they can also be navigated well.

The truth is, money matters and emotions don’t mix well, even at the best of times. Just think back to any large impulse purchase you’ve made in the past which has left you with buyer’s remorse. Now, imagine that feeling being monumentally amplified if you don’t get all this financial business around your separation quite right.

Having supported many mediations first hand, the key to being ‘OK’ after the divorce dust settles is making a clear plan to move forward financially and emotionally in as fair a way as possible.

Avoid costly ‘all-or-nothing’ thinking

“They won’t get a penny!” “They can have it all! I just want out.” “This isn’t over! I’m never signing the papers.”

All-or-nothing thinking is emotionally charged, typically masking sadness, fear and disappointment. It can also be financially unwise and drive an even bigger wedge between you and your ex.

Do whatever you can to keep emotions at bay using facts to protect you and your finances. A great starting point to de-escalate emotions is to get up to speed on the laws that govern separation and divorce proceedings in your province.

Armed with this information, you will know what your rights are and will provide comfort that your situation is manageable. Eventually, your lawyer or mediator (and be sure to hire a reputable one because poor representation can be costly) will shed light on standard practices for splitting up assets and liabilities, spousal and child support and custody.

Strive for an organized approach with your lawyer or mediator

The more organized you and your ex are about your assets, liabilities, income and expenses, the faster this process will be. If you’re on talking terms, compile a comprehensive net worth statement on the date of separation. That means listing every account and associated balance at that time. Indicate insurance policies, pensions, investment accounts as well as shared accounts for children such as RESPs. If cohabitation agreements or pre-nups were in place, gather copies of those documents. If a business is involved, you’ll need financial statements and possibly a recent valuation. Some couples go a step further and include account numbers for each item to expedite financial exchanges that might happen.

If you’re not on speaking terms, gather information on your side of the equation. The lawyer or mediator will pull both sides together for negotiations. The more disorganized and less transparent a couple is, the more expensive, time consuming and emotional the disclosure process will be.

Be clear about your deal breakers

Consider everything in your shared lives that has financial and emotional value and put a price tag on them. From pensions to airline loyalty points you’ve collected together, to the time you have with your children, to a child’s preferred education, to who gets the pets. Then make a wish list of everything you need in order to be well after the split.

Your representative will need to know this information so that they can negotiate fairly for you and any children involved. A separation agreement is typically set in place once the parties are satisfied with these negotiations.

Adjust your budget and lifestyle immediately

One of the biggest financial mistakes I see people make is not adjusting their lifestyle and costs after separating. There’s a strong chance you’re going to have less money leaving you quickly in debt if you don’t adjust your spending. Build a new budget based on what you can afford. Include investments for retirement which may have been impacted in the separation. If you’ve been left with a pile of debt, ensure you have a realistic payment plan for it. If you are a giver or receiver of support payments as a result of the separation, include that information in the budget too. And make sure there’s money earmarked for emotional support as you go through this transition.

This post-split process of budgeting can be quite healing — like hitting a financial reset button. It is a practical healthy next step for your finances and prepares you emotionally for your new life by helping you plan ahead.

And don’t wait to meet with your financial adviser — the earlier you bring them into the process the better.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.