Covering your assets before a divorce
If you suspect your soon-to-be ex is keeping you in the dark financially, don’t let yourself be victimized.
Divorce is always devastating. But for some couples, parting with their other half is easy compared to dividing income and assets fairly.
While some spouses may have unrealistic expectations or simply aren't emotionally ready to settle up, others are dishonest and deliberately try to hide or deplete their assets.
Not only is this a miserable way to sever a relationship, it can also land you in jail.
That's what happened to a Kitchener Ont. man who attempted to keep his ex-wife in the dark while transferring all the shares of his company to his son and methodically draining his RRSPs in an effort to reduce his spousal support obligations.
During divorce proceedings, the couple, who had been married for 23 years, agreed that the wife was entitled to a monthly payment of $2,500. But a year later, the husband applied to have that amount reduced on the basis that his income had dropped to zero.
Upon finding that the drop was solely due to the husband secretly milking his assets, the courts decided that restitution and a six-month jail sentence were called for — a decision that was upheld on appeal earlier this year.
If your relationship is failing, don't let the same thing happen to you.
It may be several days before you can see your lawyer for advice, says Christina MacNaughton, a family law specialist in St. Catherine's, Ont. In the meantime, here are a few things you can do to protect yourself financially.
Does your spouse have power of attorney for you? If so, get the document back if a copy is in his or her possession. Go to the bank and cancel any power of attorney you have given your spouse for the accounts.
If your spouse refuses to give it back to you, call your lawyer's office, explain the situation, and ask them to draw up a "revocation of power of attorney" for your immediate signature.
Do you and your spouse have a joint bank account? If so, it can be closed out by either of you.
The usual rule is to take half of the contents for yourself, but if you're financially dependent upon your spouse, it may make sense to take out all of the account contents, McNaughton notes.
Keep the bank statement or passbook as evidence of the final balance and of how much you took from the account.
If there are outstanding cheques or pre-authorized withdrawals from that account, arrange to have them redirected or otherwise covered. The last thing either of you needs right now is to injure your credit rating.
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