Tips & advice to help you navigate your finances

Brooks Financial 2017 Income Tax Changes

What’s New and Revised for the 2017 Personal Income Tax Return?

The Government of Canada has announced several changes and improvements to personal income tax benefits and credits. The following should be considered for your 2017 personal income tax return: Those responsible for raising children under 18 years of age may be eligible for the tax-free monthly Canada Child Benefit (CCB) …

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Busted! Don’t Believe These Financial Myths About Divorce!

Getting a divorce is no easy matter! It can be quite traumatizing while simultaneously putting a strain on your finances. When faced with such situations we often seek assistance from people who may be unaware of actualities and console you with information that isn’t accurate.

Misinformation causes some of the most common mistakes that people make. As most of these myths involve financial aspects of a divorce, they could have an adverse impact on your financial life in the future and the present as well.

While every situation is different, misconceptions are similar. Hence, here are a few myths that we’ve debunked to help you ensure your divorce doesn’t decimate your finances.

Myth 1: Only family law lawyers can help clients understand the implications of their financial settlement.

This myth exists because this has been the way it has been done. However, a lawyer’s expertise is the law, not finances. A Certified Divorce Financial Analyst or Chartered Financial Divorce Specialist has a financial background and also has specific training in the nuances of finances during a divorce. Your Divorce Financial Professional can prepare financial statements and projections that show the long-term effects of proposed settlement offers. Your settlement will determine your standard of living for many years to come. It’s simple, hire a lawyer to provide legal advice and a financial professional to provide financial guidance.

Myth 2: What’s mine is mine and what’s yours is yours.

Often couples keep ‘separate money’ during their marriage. Sometimes this happens as each spouse wishes to maintain their autonomy, or one spouse is financially irresponsible. However, this does not mean it is separate property when it comes to divorce. All assets acquired from income earned during the marriage are marital property. If one spouse has savings from their income, then that is also an asset of the marriage.

‘Separate property’ is anything that was gifted or inherited during the marriage, or brought into the marriage and left in the spouse’s separate name. As long as it is kept separate and not co-mingled with marital assets, it will remain separate property.

If those assets become co-mingled, they are considered to be gifted to the marriage and are no longer separate property.

Myth 3: A 50/50 division of property is always fair.

All assets are not created equal. This mistake is often made as people neglect to consider the ultimate financial outcome of owning a particular asset. RRSPs and pensions have an income tax consequence. Homes have a selling cost, and housing markets can fluctuate. Trading off pension assets to keep the family home may have serious long-term effects on your ability to retire.

The best way to understand your settlement is to work with a Divorce Financial Professional who can project the short and long-term impact.

During a divorce, you end up making some of the biggest financial decisions of your life. Due to the complicated financial intricacies of divorce, it’s always best to seek advice from the best and most knowledgeable people out there. And this is exactly why Empowered Divorce Solutions is there to guide you.

We will help you understand how the combination of income, property division, and spousal and child support will affect you post-divorce. For a complete list of our services, please click here. If you have any questions about Empowered Divorce Solutions, we’d love to hear from you. Contact us here.

An OAS and CPP Primer, understanding sources of government retirement income

An OAS and CPP Primer

The majority of Canadians spend their lives drawing income from one main source or employer during employment years. Retirement income, however, requires careful planning since we can no longer depend on one main source for our income.

Avoid These Financial Mistakes When Going Through A Divorce

If you’re considering a divorce or are in the process of getting one, you must keep in mind that your divorce may be the single largest financial decision you will ever make. More often than not, divorce is emotionally challenging and chaotic. In addition, there are several complicated financial intricacies of divorce.

To help you make the right financial decisions during a divorce, we’ve compiled a list of the most common mistakes to avoid during the process.

50/50 division of property is a fair division. Believing that a 50/50 division of property is a fair division. Some assets have tax implications while others do not. Pensions and RRSPs need to be discounted by an average tax rate that would be realized in retirement. some investments will have a capital gain on sale, others will not. During your settlement process it is important to compare apples to apples. In addition, future earning potential for each spouse can be a big factor in equitably splitting your assets. It is important to discuss these issues with a Financial Divorce Specialist to ensure that your post divorce Net Worth is what you expected it would be.

Keeping the family home may not be the best decision. Failing to understand that it is not always a good financial decision to keep the family home. Keeping the family home is often an emotional decision, not a financial decision. If you cannot afford to keep the home you will eventually find yourself in a worse financial situation. Often one spouse will trade off retirement assets for the home leaving them unable to retire as planned. They have become house rich, income poor. Your Financial Divorce Specialist will project these two scenarios through your retirement years, illustrating to you what would be a sound financial decision for today as well as your future.

Deciding financial issues one at a time. Financial issues are like pieces of a puzzle that affect each other, falling into place when you understand the comprehensive picture. Factors such as income tax, capital gains tax, investment risk, inflation and transferability of assets all interact with each other. A fair settlement begins by looking at a comprehensive picture of your finances and then determining suitable courses of action.

Failing to consider alternative solutions. Have you considered various options to splitting the marital assets and debts? Each option has different outcomes you may or may not be comfortable with. Your Financial Divorce Specialist will show you several options in the division of property, from there you can choose the one that best meets your needs today and in your future.

Failing to ask “Will I be financially secure after my divorce?” before signing the divorce papers. By only looking at the immediacy of splitting assets and obtaining spousal and/or child support, without understanding how it looks 5, 10, or 20 years down the road you are doing yourself a great disservice. Planning for the future is key. By addressing all the financial mistakes discussed here, and analyzing the long-term financial impact of various settlements, you achieve excellent understanding of the shortfalls of certain proposed settlements and the fairness of others. Focus not only on your immediate and short-term needs, but also on your long-term financial security. Remember, once the papers are signed, the settlement is a done deal!

Not correctly evaluating the defined benefit pension plan. A defined benefit plan pays a monthly income at retirement and has a value today. What is that value? Often it is important to hire an independent and objective actuary to value that pension. This value can often be quite different than what is reflected on the pension statement.

To avoid these and other divorce related pitfalls, reach out to the experts at Empowered Divorce Solutions. Empowered Divorce Solutions works with individuals and couples to understand how the combination of income, property division and spousal & child support will affect you post-divorce. Through financial analysis and custom designed tools, we bring financial clarity and structure to a process often clouded by emotion, haste and misinformation.

For a complete list of services, please click here. If you have any questions about providing clarity to your financial decisions, we’d love to hear from you. Contact us here.

Top Five Things To Look For When Hiring A Divorce Financial Planner

If you’re facing a divorce, it can be an incredibly overwhelming and stressful time in your life. In addition to the added emotional turmoil, there are several decisions to make to navigate the course of a divorce. You may be confronting several uncertainties and unsure of how to take the right steps forward.

In these difficult circumstances, it can be extremely beneficial to hire a professional to help handle the financial planning and decision-making throughout divorce proceedings. The right financial guidance can help you secure your future and move on with ease. Some of the things a divorce financial planner can assist you with are:

  • decisions about keeping or selling the marital home,
  • determining what is personal property versus marital property,
  • valuing assets and dividing them equitably,
  • understanding the importance of retirement accounts,
  • forecasting spousal and child support needs,
  • finding solutions to potential tax problems,
  • dividing retirement accounts (pension plans, stock options, RRSPs),
  • optimizing the division of marital debt, and much more.

To help you hire the right person to help you manage your finances, we’ve compiled a list of the top five things to look for when hiring a divorce financial planner.

1. Divorce finance credentials. Divorce Financial Professionals (Certified Divorce Financial Analysts CDFA & Chartered Financial Divorce Specialists CFDS) are a valuable asset throughout the divorce process, both for the client and the other professionals involved. They have a thorough understanding of the financial obstacles that arise during divorce including analyzing financial status, cash flow, and net worth, evaluating division of property, reviewing tax implications, and evaluating risks.

2. Certified Financial Planner designation. It is important that your Divorce Professional has the right credentials, but it is equally important that they have a Certified Financial Planner (CFP) designation. The client will be working with a lawyer, so it is important to choose a financial professional with a solid financial background.

3. Experience. Substantial professional financial experience provides the foundation and underpinnings of a highly qualified divorce financial professional. It is important to know how much experience a divorce professional has, as this person will play a fundamental role in the determination of their client’s future financial well-being. If the client is approaching or in retirement, it is important that the financial professional is proficient in retirement income planning as the retirement assets now have to split in two.

4. Strong financial literacy with income tax and accounting background. Hire a financial professional who has a strong background in the areas of cash management, spending plans, income tax, investment, insurance, retirement and pension plans, property division, individual and family financial planning concepts. As rules and regulations constantly change, continuing education in the financial fundamentals of divorce is critical.

5. A good working rapport. It is also important that you can work well and feel comfortable with your financial professional. Do they have good listening skills? Are they empathetic? Do they understand the emotional aspects of divorce?

If you’re looking for financial guidance before, during, or post-divorce, Empowered Divorce Solutions adds value at every step of the process. Whether you are contemplating a divorce or currently struggling with a difficult divorce settlement, we provide educated objective divorce financial analysis and advice that results in saved money, legal fees, and stress. We will work with your lawyer or mediator and tax professional to help you make better financial decisions before, during and after divorce.

For more information about our divorce financial planning services, please click here. If you have any questions about your financial situation at any stage of divorce, or for a free consultation, please contact Empowered Divorce Solutions here.

Business Spotlight: Empowered Divorce Solutions

Thanks for stopping by our blog. If you’re looking for more information about Empowered Divorce Solutions, you’ve come to the right place.

About Empowered Divorce Solutions

Founded in 2010 by Tesia Brooks, Empowered Divorce Solutions assists clients with financial planning during a divorce. We work with pension actuaries, business valuation experts, mediators, lawyers, mortgage brokers and realtors to help ease the divorce process for our clients. We operate from Winnipeg and provide services all across Canada.

We are in a state of growth and looking forward to soon offering mediation along with divorce financial planning services. Many of our clients are undergoing divorce at the time of retirement which is the fastest growing segment of divorce. We also assist clients who are remarrying or entering common law relationships. Additionally, we aim to offer marriage contract services in the near future.

Empowered Divorce Solutions Difference

Tesia Brooks is a Certified Divorce Financial Analyst, Certified Financial Planner, Master Financial Advisor, and Certified General Accountant. She uses her forty years of financial experience and four designations to benefit the clients. She approaches each client as if she was in their shoes and completely empathizes with them.

Tesia thinks that each client who gains financial clarity through her work is an achievement. She helps people get to the other side of a nerve-wracking event and seeks to be a part of the change in the way the divorce proceedings are handled. Tesia strives to help clients feel empowered rather than feeling lost while going through the hardship of a divorce.

Clients choose to do business with Tesia because she is an extremely detailed and focused financial planner with a comprehensive knowledge base. She makes the best use of her knowledge of accounting, tax, financial planning and retirement income planning together to provide a holistic service to clients who are facing one of the most stressful events of their life.

At Empowered Divorce Solutions, we specialize in “grey divorce”, a term coined for those who choose to divorce during their retirement years. Retirement can be a particularly vulnerable time for divorces as most retirement plans are built on both parties’ financial contributions. Unfortunately, divorce during this life stage requires the division of complex financial structures like RRSPs, TFSAs, homes, cottages, children attending college/university, and non-registered investment portfolios along with managing child and spousal support issues. Tesia and our team work hard to create a new financial plan and reshape our client’s goals for the future.

If you’d like more information about our divorce services, please click here. If you have any questions about managing finances through divorce or separation from anywhere in Canada, we’d love to hear from you. Contact us here.

Creating a Holistic Retirement Income Plan: After Tax Income Sources

Last week, we introduced the three main considerations when creating a holistic retirement plan – lifestyle plan, after tax income sources and income tax and portfolio plan. In our last post, we focused on lifestyle plan – determining your goals and main priorities for retirement. Once this has been established, we calculate how much money you …

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