Dealing with Divorce

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Solution
In addition to settling on the division of their business assets, Christopher and Elaine's* issues to consider are:

• How do the settlement and childcare/education payments affect Christopher's retirement plan and short-term cash flow?
• What are the tax consequences of severing a Registered Plan and joint account on marriage breakdown or divorce?
• Are registered plans taxable - what about capital gains and losses on property transferred? Who reports the income from the property after its division?
• What's the best way to protect child support payments and education costs in case of premature death or disability?
• Who will maintain family benefits such as medical/dental?
• Should they review their Wills, Powers of Attorney, and estate plan, and make changes to things like the beneficiary designations?
• What is the implication of naming minor children as beneficiary of RRSPs?

A divorce can have a significant impact on your retirement planning. In many situations, a divorce will mean a splitting of employer pension credits, Canada/Quebec pension plan entitlement and splitting RSP assets, which will reduce the amount of expected retirement income. Clients may need to make adjustments to their current spending to take into consideration the additional cost of making alimony/support payments and will have to review their cash flow to determine how much income is available for savings.

Divorce, like any other major life change, requires a review of insurance protection**. The separation agreement should address insurance coverage requirements that could range from maintaining existing coverage to obtaining additional coverage. An Estate & Insurance Advisor can facilitate the change or implementation of a new insurance program, in this case, for both Christopher and Elaine.

If you're faced with transition planning issues, and want to ensure that you're aware of and addressing relevant investment concerns, contact a BMO Nesbitt Burns branch near you or complete our simple online request form to have an Investment Advisor contact you directly.

* Fictional characters. Any similarities between them and actual clients of BMO Nesbitt Burns Inc. are accidental.

**All insurance products and advice are offered through BMO Nesbitt Burns Financial Services Inc. by licensed life insurance agents, and, in Quebec, by financial security advisors.