Collaborative Practice Toronto is a community of collaborative professionals working to provide information to families considering a collaborative divorce. We also exist as a resource for legal, family, and financial professionals looking to become involved with collaborative practice. We regularly ask our members to provide our blog readers with expert answers to common questions we receive about collaborative practice.
This week, Matthew Krofchick helps separating couples realize that the way that a family earns its household income becomes a huge factor when that couple decides to separate. Because each family is different, financial conflict almost always depends on each family’s unique financial situation.
Q: What is the most common financial issue separating couples overlook?
While this may seem like a straightforward question, the answer truly depends on how the spouses earn a living. For example, spouses that are employed in a unionized environment may realize that they need to have their pensions valued but are often unaware that depending on how their pension is dealt with upon separation, a tax calculation maybe required to fairly attribute its value for net family property.
On the opposite end of the spectrum, self-employed spouses often understand that their business will need to be valued, but may not realize that an expert may need to determine their income for support purposes.
The rationale behind this is that income reported on your tax returns is often not the same amount contemplated in the Federal Child Support Guidelines, which have a different set of rules than those for income tax purposes.
Matthew Krofchick, CPA, CMA, CBV, CMC, CFF