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  • Writer's picturePatricia Greco, CPA, CA

The "How to" in Financial Disclosure

Going through a separation and divorce is a major life transition that can be full of stress, uncertainty, and a mountain of paperwork.

For example, if your divorce requires claims for support or dividing property — as many do — you and your spouse will need to provide financial disclosure. This disclosure includes filling out a financial statement, which gives information of your income, expenses, the value of property and other assets, childcare expenses, bank accounts, loans and credit card debts, etc. For some, gathering and sorting this information can be a daunting task.

In my role as a neutral financial divorce specialist, I help clients navigate this process of financial disclosure, saving them time and money. But it’s so much more than that. By providing a complete financial picture, people feel empowered to make better decisions for their future.

So, what is it like to work with a financial divorce specialist? Let’s explore the story of Alana and Elliott (not their real names) — a husband and wife who have just decided to get divorced and are starting to get organized.

Alana and Elliott have opted to settle their legal and financial issues through a collaborative process, an out-of-court process that involves a team of professionals trained in collaborative practice — financial divorce specialists, family counsellors, lawyers and others — who support and guide the discussions toward the goal of achieving the best possible outcome.

Case study: preparing the financial statement

Alana and Elliott had been contemplating divorcing for more than a year and have now decided to move forward. When Alana called my office to inquire about my services as part of a collaborative separation, she was concerned because she and Elliott were not on the best terms.

I assured her that as long as they were both committed to being open and transparent, we could work together. As a financial professional, I do not take sides. Instead, I’m gathering financial information and preparing statements.

Frequently, when a couple is divorcing, they are searching for the same financial information, especially when it comes to joint accounts. One of the many benefits of working with a financial divorce specialist is that it’s more cost-effective.

As part of the collaborative process, Alana and Elliott — along with all members of the collaborative team — sign a participation agreement, indicating they agree to resolve all their issues out of court. They understand they must agree to complete financial disclosure.

At this point, we discuss their entire financial picture to understand all assets and debts, employment, income streams, dependents, how they’re handling their finances, and their financial goals moving forward. The whole picture.

Once I have that, I provide them with a checklist of all required documents. Although their relationship is rocky, they see the advantage of taking a “divide and conquer” approach to their financial statements and resolving their financial issues. They split up the list, so they do not track down the same information.

Alana provides most documents electronically, while Elliott prefers to print hard copies and send them to my office. Once I have all the information, I put together the financial statements — known as a Form 13 or a Form 13.1 (if there is property division or support). When the forms are complete, I transfer them to their legal representatives.

Case study: financial forecasting

During the divorce process, couples often have to make significant financial decisions around the equalization of property, including the division of assets such as the matrimonial home and pensions. Financial forecasting is a powerful tool that I leverage to help clients make more informed decisions.

For example, with Alana and Elliott’s separation, there were questions concerning spousal support and Alana’s pension. Elliot was presented with two options for support and had to decide between them. While he considers himself to be savvy with his finances, one offer was taxable to the recipient and tax deductible to the payer while the other was not. He struggled with how either option would impact his finances going forward.

Also, settling the equalization included Alana’s sizable pension. Elliot was faced with whether to take equalization in the form of cash from the proceeds of the sale of the matrimonial home or 50 per cent of the pension, which would roll into a locked-in retirement account.

These are both significant decisions causing some confusion and overwhelm. I ran the information through my forecasting model and was able to demonstrate visually the different scenarios and options. By providing a visual translation of the outcome of each decision, Elliot has a better financial picture of both the short term and long term and felt empowered to make decisions to be documented in the separation agreement.

Informed is empowered

It’s tough to make decisions without considering all your options at the best of times, never mind when you are experiencing such a major life transition. Even if your separation appears to be straightforward, you can benefit from the services of a financial divorce specialist.

The foundation of my work is built on understanding my clients’ situations, challenges and goals with compassion and care. Using a disciplined approach to deliver personalized creative solutions and outcomes, I provide a roadmap for the future giving you peace of mind.

If you are facing a separation or divorce, it’s essential to understand your financial picture before making big decisions. If you would like to schedule time to discuss your options, please reach out.

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