Your Finances and Divorce

There are two things in Divorce, money and kids.

The issue is that emotions can play havoc with our ability to make sound financial decisions in divorce. While kids are most couples number one priority, grounded parenting discussions and planning is not likely until the money issues are resolved.

So while, it might seem that parenting should be decided first, this is not the best strategy. Deal with money matters first and put in place a short-term parenting plan, while negotiations are ongoing. Even if this seems counter intuitive — it works much better for a faster, less costly divorce.

Money Matters:

Child support

The Federal Support Guidelines set out specifically what child support will be. This is based on the incomes (usually starting with line 150 of the T1s) and the number of dependent children. Child support will change depending on whether the parents are sharing 50/50 or some other scenario. If parents are sharing 50/50 then the child support paid will be based on the amount payable by the higher income earner minus the amount payable by the lower-income earner. The difference is then payable to the lower-income earner. If parenting is not close to 50/50 then child support is payable on the income of the non-residential parent regardless of whether they are the lower or higher income earner.

There are many tables available online now so that anyone can access these calculations.

The issue with child support and what can cause arguing is the determination of income — especially for self-employed individuals or individuals with other non-T4 income. The other issue that must be determined is the section 7’s or commonly known as extraordinary expenses. These expenses are those that are above and beyond basic child support. These expenses are usually shared pro rata based on incomes and are agreed to in advance unless otherwise decided.

Written by Karen Stewart. To read the full article, click here.

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