Lesson 7: Equalization

Equalization vs. Retirement

Lesson 7: Equalization

Welcome to the 3rd part of your Portfolio.  This is the  Asset Portfolio where we focus on your assets and your debts and how to keep the best assets and lose the worst debts.

The purpose of this lesson is to introduce you to Equalization Laws, other wise known as marital property or community property laws. In We will introduce you to these laws, we will explain how and why these laws affect your assets and debts and we will 


we will be going through your assets and debts and determining which ones you should keep and which ones you should eliminate.  We will be covering your house, vehicle, cottages, toys, investments, pensions, household contents etc. and teach you how to keep the best assets and to eliminate the worst ones.  We will not get into detail about your assets and debts in this lesson.  We are only teaching the basics of equalization laws so that you can learn how to use those laws to help you pick the best assets and debts.  

Now I know this is not the most interesting part of the Equalize portfolio and you would rather  just skip to my list of the best assets and debts to keep, but this is a crucial step that cannot be skipped or else you’ll miss some important issues and may make a wrong decision that could cost you thousands of dollars.  

So take the time to go through this lesson and learn the concepts of Equalization laws and how these laws affect your assets and your debts.  Try to think about how these equalization laws may affect your assets (Back to me) as this will help you later on in the program. 

Dive in and if you have any questions please let us known.  

Alright folks let’s talk about Equalization Laws.  Equalization Laws, often called marital property or Community Property Laws, are the laws that force you to divide half of your stuff with your ex-spouse.   

We know about Equalization laws from popular culture.  We often see tv shows or movies where wives and husbands complain that their exes “Took Half of their stuff”  or we hear of angry spouses chopping their stuff in half out of spite.

We are all taught to be afraid of these laws, but what do these laws really mean?  How are these laws applied?  How do these laws affect you?  This video will explain the seven basic things you need to know about equalization laws.  This video will also dispel some of the myths and misconceptions people have about these laws. 

Remember, these are the basics and you still need to meet with your lawyer before you make any property related decisions.  

Number One. Equalization laws mostly only apply to Married couples.  Most equalization laws require you to be married to get any property rights.  A lot of my clients believe that just because they lived together for a few years means they need to give their ex-spouse half of their stuff.    This is not true for the most part.  

There are some exceptions where non-married spouses can get some property rights.  These are rare situations like you’ve been together for over twenty years and / or if your spouse contributed a significant portion of their money to help build your wealth.  But for the most part you must be married to get half of your ex-spouse’s stuff.  

This is important to remember because I have had clients who gave half of their wealth to their non married spouses before coming to me.  By the time I got involved it was too late and they lost tens of thousands of dollars.   So if you are not married, make sure you talk to your lawyer about whether you have any obligation to divide your wealth with your ex-spouse.  

Alright so number Two:   

Number Two: You only divide your Net Wealth not your Total Wealth.  What we mean is that you don’t need to give your ex-spouse half of everything you own.  You give them half of what would be left over if you paid off all of your debt.  The easiest way to look at it is to pretend that you sold everything your family owns on the day you separated.  Then pretend that you paid off all of your family debt.  Whatever is left over is your Net Family Wealth – that is what gets divided in half.  I go into more detail in my 5 steps to Calculate Your Equalization video but for now just remember that you only divide your Net Family Wealth  not your Total Family Wealth.  

(title) Number Three:   Equalization laws treat you as if you and your spouse are equal partners in a team.  The law automatically considers you to have contributed equally to your marriage.  It doesn’t matter if your ex-spouse did nothing throughout your entire relationship, the law considers you to be equal partners and therefore gives you both share an equal part of your Net Family Wealth.  There is often very little you can do aside from an agreement to protect yourself from this. 

This also means that you must add everything your ex-spouse owns as well.  Do not forget that they may be hiding some assets and you may need to do your best to find any hidden accounts or assets.  

Number Four:  You only have to divide what you earned during your marriage.  This means whatever you earned before marriage and whatever you earn after separation does not need to be divided.

Consider Johnny Depp who is worth an estimated 200 million dollars but only had to pay his ex wife of two years 7 million dollars.  Compare this to James Cameron who owed his wife 50 million dollars for a two year marriage.  The difference is that James Cameron released the Titanic during his two year marriage and he had to divide the profits that movie brought him, while Johnny Depp had already earned the majority of his wealth before marriage. There is likely a prenup for Johnny Depp there as well.  

This applies to my real life clients as well.  I had a client who brought in roughly $100,000.00 into his marriage.  After a ten year marriage they only had $150,000.00 Net Family Wealth.  Because of the money he brought into the relationship he kept $125,000.00 and his wife got $25,000.00.  

One of my clients was able to save almost $30,000.00 by proving that his snowmobiles, ATV’s and drag racing car were owned before he married. 

The important thing for you to remember is that anything you owned before marriage does not get split with your ex-spouse.  Make sure to get as much evidence you can of the assets you owned before marriage. Remember, you must also count your pre marriage debts too.  

Number Five:   There are certain items you don’t need to share with your ex-spouse:    These items are often called “Excluded Property” are often gifts, inheritances, life insurance proceeds, Personal injury settlements and anything you and your spouse agree are excluded.  So you may be able to exclude some assets that were gifted to you or that fall into one of these categories.

Be careful though as there are often strict rules that eliminate these exclusions.  This often means proving that you still have the asset and proving that the money did not go into a jointly owned bank account or asset.  

If you put a gifted asset into a joint bank account then you will likely lose that exclusion and you will have to share the asset with your ex-spouse.  

For example, I had one client who earned roughly $600,000.00 from a personal injury settlement.  Personal Injury money is excluded.  When he separated, He was entitled to keep all of that money.  However, first he had to prove where he put that money.  Here is where he made his huge mistake.  He put the money into his joint investment account that he owned with his wife.  By putting the money into a jointly owned asset he lost his exclusion.  In the end,  he lost $300,000.00 and was not able to get it back. 

There are other exclusions to remember so make sure to meet with your lawyer before you make any large decisions about your assets.   If you get an inheritance or a large sum of money, ask your lawyer about what you should do to protect that money.  A meeting may cost you a few hundred dollars but it could save you millions.  

Number Six:   You or your Spouse can Agree to Almost whatever you want: THe Key word here is you have to agree.   The courts allow you to make whatever agreement you think is fair and reasonable.   Before marriage, an agreement is called a Prenuptial Agreement or Marriage Contract. An Agreement After separation is often called a Separation Agreement or a Divorce Agreement.  

Kaley Cuoco, the star of the Big Bang Theory, married Ryan Sweeting, a famous tennis player  during some of her highest grossing Big Bang Theory years.  She was worth an estimated $72,000,000.00 when they separated but she only had to pay him $165,000.00 because they signed a Prenuptial Agreement. 

A famous example of a spouse agreeing to take less after a separation was Russel Brand who apparently agreed to take nothing from his ex-wife Katy Perry despite the fact that she earned several millions during their two year marriage.  

In my experience, Most prenuptial agreements include clauses where a spouse agrees to not touch the other’s business or investments after separation.  They can be overturned so make sure that you have your lawyer draft a well protected Agreement.  

Finally Number Seven:  How much you pay depends on how much your Ex-spouse is worth.    Equalization laws affect you less or more depending on how much money your ex-spouse is worth compared to you.   Unlike spousal support and child support this is about what your ex-spouse owns rather than how much money they make.  

There is little you can do about this after a separation, however, if you wanted to know why some people separate unscathed, a major reason is because their ex-spouse likely earns as much and is worth as much as them.  

If you are still married, encourage your spouse to save as much money as possible during your marriage.  The more they save, the less of your money you have to give.  For example, your ex-spouse may earn less money than you per year, but if they are better at saving, they may have saved as much as you or even more.  

I have had a client who earned over $150,000.00 a year but was terrible at saving his money.  She would waste it on buying a new truck every year and buying expensive meals and trips.   His wife only earned $40,000.00 a year but she was much better at saving.  When they separated, he owned almost nothing and his ex-wife had to give him half of her retirement savings because she was the only person who was able to save anything.  She was obviously very upset.   

The basic idea is that you are generally better off with a spouse who saves as much or more money than you do. 


To summarize,  if you are not married, you may not have to divide anything.  Whatever you owned before marriage or bought after marriage will likely not have to be divided.  You add up your total assets and your total debts.  You must make sure that you count your ex-spouse’s stuff as well. 

In the next lesson we will talk about how equalization is calculated.

If you have any questions please email us.    

Calculating Equalization

Alright welcome to Equalization part two.  In this video  we explain the 5 steps to calculating your equalization payment.  The goal of this video is to help you see how your family assets and debts are divided.  We know from the 7 basics of Equalization laws that you add up all of your assets and subtract all of your debts but this lesson will teach you how it’s done.  You can then use this to help you create the best plan for your assets.   

Remember, we are talking about your stuff or your assets and debts, we are not talking about your income here.  

Before we begin, it is important to note that equalization laws are very complicated.  This lesson explains the basics of calculating Equalization.  In real life there will be other laws that will affect this calculation.  For example, there are different rules on how to value an asset, what date you have it valued and who gets the asset. 

 This video will teach you the basics but your lawyer will help you with the specific issues in your case.  You must hire a lawyer before you make any decisions regarding your debts and assets.  

Alright so here are the Five Steps to Calculate Your Equalization 

Step 1:  Add all of your assets

In this step you and your ex-partner will add up all of your assets together.  The important thing to remember here is we are looking at both of your assets.  A lot of people try to hide bank accounts or hide different things from their ex-partner so that they do not need to count them.  

Step 2: Add all of your debts – This step is simple, add all of your and your ex-spouse’s debts.  It is important to list all of your debts.  Any forgotten debt can lead you to pay more than you should.   Your family debt includes credit card debt, student debt that hasn’t been paid off yet. Remember you want to include your debt and your partner’s debt.  

Step 3: Subtract your total debts from your total assets. (B roll animation of the addition and subtraction). This gives you your (title – Net Family Property) Net Family Wealth.   This is how much money would be left over if you sold off all of your assets and paid off all of your debts.  This is the amount that gets shared with your partner.  

Step 4: Divide your Net Family Wealth in half.  Your Net Family wealth is what would be left over if you sold everything and paid off all of your debt.  This amount is divided equally and each partner takes half.  Now in real life you can’t just sell all of your assets and therefore we have Step 5. 

Step 5 – Figure out what assets and debts to keep – Step 5 is the important step for this program.  This is the part that this program focuses on.  IN Step 5 you need to determine what assets you want to keep.  This is where most of my clients get themselves into trouble.  

For example, do you keep the house, the car, the boat? Or do you sell the boat and keep the house? When we are talking about the best assets to keep we are talking about this step 5.  

This concludes this lesson of the 5 steps to calculating your Equalization (marital Property/ Community Property).

Remember, the laws are a lot more complicated than this lesson teaches but this should give you a really good foundation that you can use to choose the best assets and debts.  

If you have any questions please email us, otherwise we’ll see you in the next video.


Alright, so now we are going to go over a couple of examples to help you learn how the equalization laws can work.  As we saw in the last video we are going to go through the 5 steps to calculate the equalization.  

So let’s dive right into our first example:

Step 1 is to list all of the assets the family owns.  In this example the husband owns a house worth $500,000.00 and the wife owns a pension worth $300,000.00.   If you add these two together you will have a total assets of $800,000.00.  As you can see, the husband owns the bigger asset but this does not necessarily mean that he has to pay more.

Step 2 is to list all of the family debts.  In this example, the husband owns a home worth $500,000.00 but he owes a mortgage of $400,000.00.  His wife has a student loan worth $50,000.00 and therefore adding them both up amounts to $450,000.00.  As you can see, although the husband owns the bigger asset, he has more debt and therefore has less than his wife at separation. 

Step 3 is where you subtract the total debts from the total assets.  In this case you would subtract the $800,000.00 assets from Step 1 and the $450,000.00 debts from step 2.  This will leave you with a Net family property of $350,000.00. or a total Family Wealth of $350,000.00.

Step 4 is where you divide the family wealth in two and give each spouse half.  In this case $350,000.00 divided in two is $175,000.00 each.  This means that each spouse should come away with a Net Wealth of $175,000.00 each.  

Step 5 is to determine what assets you should keep. In this case, the husband wants to keep his house and the wife wants to keep her pension.  If the husband keeps his house he would have a $500,000.00 house with a $400,00.00 mortgage. This leaves him with a Net Wealth of $100,000.00.

His wife would have her pension worth $300,000.00 and would have her student loan of $50,000.00 leaving her with $250,000.00 Net Wealth.  

Since the husband only has $100,000.00 net wealth and his wife has $250,000.00 net wealth, she needs to pay him money to equalize their wealth. .  In this case, she  would have to pay him $75,000.00.  That way he has $175,000.00 ($100 + $75) and she has $175,000.00 ($250 – $75). They both have the same net wealth now.  

As you can see here, the family did not sell their assets, they simply decided to keep the stuff they owned. Note that  Mary would not be able to sell her pension in real life. 

3 key takeaways

  1. Having the bigger asset does not always mean that you owe more – having more assets and more debts can mean that you have less than your ex-partner.  This  is why it is so important to measure all of your assets and all of your debts.  In this case, Harry had the bigger asset, but his mortgage debt actually made it so that he had less than his wife.  Too many clients believe bigger assets mean bigger payment.  
  2. One partner will often have to pay some money to the other.    In this case, the wife owed $75,000.00 to make sure they had an equal share.  
  3. It is important to list all family assets and debts – The steps are add all family assets, add all family debts and subtract the two.  Forgetting an asset or debt can cost you thousands of dollars.  

Example Two

In some cases, you and your ex-spouse can agree to swap some assets around.  In this second example we are going to go over what would happen if Mary wanted the house too.  In this example all of the values are the same except Mary wants to keep the house and keep her pension too.

In this example steps one to four are the same.  They have $800,000.00 worth of assets and $450,000.00 worth of debt for a total family wealth of $350,000.00.  They should both be paid $175,000.00 each.  The only difference is that at step 5.  Mary wants to keep the house worth $500,000.00.  In most circumstances, whoever takes the house must pay the mortgage attached to the house.  So let’s give her the mortgage too.  

Now Harry owns nothing and owes nothing..  Mary on the other hand has $800,000.00 worth of assets but $450,000.00 worth of debt.  Somehow, Harry must be paid $175,000.00.  The issue is how does Mary pay him?

Now Mary has a few options

Option 1:  Mortgage on the home –   Mary can see if she could get a larger mortgage on the home.  It is unlikely in this scenario because the mortgage is already so high, but some clients do take extra mortgages to make their equalization payments. 

Option 2 – Order her pension to pay Harry – In many areas a person is able to order their pension provider to payout a portion of their pension to their ex-spouse.  In most areas, you can only transfer a max of 50% of your pension.  In this case Mary could only transfer $150,000.00 of her $300,000.00 pension.  She would still need to pay an extra $25,000.00.

Option 3: Unsecured loan – She could take out a general one of credit or could borrow from family to pay the rest of the equalization payment. 

Option 4: Payment Plan, Mary can offer to pay her Equalization payment over several months or even years.

Let’s assume Mary paid half of her pension to be paid to her ex-spouse.  She would lose $150,000.00.  She would then need to pay $25,000.00.  Let’s assume she agrees to a payment plan of $1,000.00 a month for just over 2 years.  

If Mary does this she will be left with a $500,000.00 house and $475,000.00 (remember the $50,000.00 student loan) worth of debt and a  $150,000.00 pension.  Harry will be left with a $150,000.00 pension,  $25,000.00 in cash and no debt at all.  

Who do you think is better off?  

Many people would think Mary is in a better position.  She has a house and still has half of her pension, Where Harry can’t access her pension until she retires and he only has $25,000 cash. 

At face value it may seem that Mary has the better deal but in reality she is likely in the worse spot.  She has a lot of debt to pay, A $400,000.00 mortgage, a $50,000.00 student loan and $25,000.00 in payments.  She will have to make huge payments towards her debt and will likely not be able to save any extra money.  Even worse, she may not be able to carry all of this debt and will slowly go into bankruptcy. If she is able to pay the debt she will likely have to pray that her house is worth enough when she retires.  

Harry on the other hand has a lot of freedom to decide what to do with his money.  If he spends this money to just buy a new house, he will likely be in a similar spot as Mary.  But, if he uses the money to buy a rental property or if he puts the money in an investment account, then he will likely be lightyears ahead of Mary 10 years after their separation.  

3 Takeaways

The purpose of Example two is to show you three takeaways

  1. What assets you choose has a huge impact on your future – It is very important for you to pick the right assets. Mary wanting to keep the house forced her to take way too much debt.  She would have been better off to let that house go in this scenario.  
  2. You do have some freedom to pick and choose which assets and debts to keep.  As can be seen in example 1 and 2, Mary and Harry had some freedom to pick what assets they wanted to keep. 
  3. Don’t take the asset if you have to take on too much debt.  As can be seen with Mary, taking too many assets can force you to take too much debt.  You will kill your budget if you try to keep all of your assets after separation.  

So that is it for this video.  If you have any questions please email us.  


Alright guys,so in the last video we taught the 5 steps to calculate your equalization payments.  We know that Equalization  is all about our assets and debts and not our incomes.  The question we now have to ask ourselves is what does the law define an asset and a debt as.  More importantly, which assets should we keep?  What makes a good asset and what makes a bad one?

That is the purpose of this video.  We will first teach you how Family Law defines Assets and Debts.  Secondly, we will teach you how YOU should define good assets and bad assets.  

So where the first definition shows you what to expect, Your definition will show you how to make a plan that best protects your wealth.

Part 1:  How Equalization Laws Define Assets and Debts

How Equalization Laws Define Assets

Equalization Laws define Assets as basically anything you or your spouse own.  It can be a house, vehicle, cottage, bank account, pension, jewelry etc.  

But it can also be other things like licenses, businesses, royalties, intellectual property etc.  Basically the law considers anything you own to be an Asset.  

What equalization laws really care about is WHEN you own the asset.  Equalization Laws care about three days:

  1. The day you got married
  2. The day you Separated
  3. Today 

Equalization cares more about when you own something versus what it is.  They will consider almost anything to be an asset but they care more about when you owned it and how much it was worth when you did.  

How Equalization Laws Define Debts:  

Debts are more straightforward.  Debts are any amounts of money that you owe to someone.  Most debts are mortgages, lines of credit, credit cards, student loans and loans from family members. All of these are debts according to Equalization laws too.  

Just like Assets, the law is only concerned with the three ‘days’:

  1. The day you married
  2. The day you separated
  3. today.

Most importantly there are a few special assets that can either protect or hurt you.

Special Assets:

  1. Excluded Assets:

In Equalization Laws, there are certain Assets that can get excluded.  These are typically, Gifts or Inheritances, Personal Injury Money, or whatever you and your ex-spouse agree are to be excluded.  

Ask your lawyer if any of your assets fall into these categories.  If they do, then you do not need to divide that asset with your ex-spouse.  

  1. Pre-Marriage Assets:

Pre-marriage assets are often also excluded, save for certain exceptions.  This means that anything you owned before marriage would be considered a pre-marriage asset.  However, with these assets you are only to consider it’s pre-marriage value.  This means if you had an investment account before marriage but it went up in value $50,000.00 during your marriage, you would have to divide that $50,000.00 with your ex-spouse.  In that same light, if you brought in a vehicle worth $20,000.00 into the marriage but it was only worth $5,000.00 after marriage, your pre-marriage vehicle can help you save $15,000.00.   

It is important to list out all of your pre-marriage assets. However, you should not do anything before consulting your lawyer.  There are always more complicated factors to consider and your lawyer will help you out.   It is important to know that there are several complicating matters that affect your assets in real life.  You are best to meet with your lawyer to determine what assets are pre-marriage. 

  1. Matrimonial Home 

There are sometimes special rules that protect your matrimonial home.  Make sure to ask your lawyer about whether these rules apply to you.  

So there are the basics of how Equalization Laws define your Assets and Debts.  Next we will cover how YOU should define your assets and debts.

Part 2:  How YOU should define your Assets and Debts

How You should Define Your Assets

We know that the law considers almost anything you own as an asset.  But you need to decide what assets to keep.  How do you know a good asset from a bad asset?  

There have been many personal finance gurus that have come before me.  This part is where their knowledge comes in handy.  At its simplest a “good asset” is one that makes you money.    Therefore, the basic definition of a “bad asset” is one that costs you money or loses you money.  

Robert Kiosaki, goes into this concept in depth in his book Rich Dad, Poor Dad. Mr. Kiosaki says that anything you own that does not make you money is a liability.  He recommends (within reason) losing all assets that do not help make you money in some way.  

For example, Robert Kiosaki argues that your house is not an asset.  He writes that you have to pay mortgage, insurance, utilities, maintenance and several other bills just to maintain the property.  He then argues that if you took the money you spent on your house and bought a rental property instead, you could earn more money even faster and be better off.

The benefit of a good asset is it will help you retire.  The problem with a bad asset is it makes it harder to retire.  IF you are like some of my clients, you may never retire.  Or as some of my clients have done, you may work until you get a heart attack and are forced into bankruptcy.  

If we take the definition that a good asset is only one that makes you money, then what would fall out of that category.

Examples of Bad Assets:

The two most common bad assets are the family vehicles and home.  They both cost money to maintain and do not generate you any income.  Of the two, vehicles are the worst culprit because they also lose their value overtime.  This means in the long run, you will be better off to put your money into buying other assets.  Other examples of bad assets are recreational vehicles, cottages,   etc.  

Bad assets are a problem after separations because clients will cash in their good assets to pay for their bad assets.  This is a serious problem.  This is one of the biggest reasons my clients struggle financially.  

Examples of Good Assets:

Good Assets are obviously the assets you have that make you money.  These are most typically investment or retirement accounts, rental properties and pensions.  Of my clients, the ones who focused on keeping these types of assets faired the best post separation.  

These types of assets can be anything though.  I have seen royalties, licenses, and businesses all be used as good assets.  There have also been a couple of lucky situations where housing markets have skyrocketed and some clients made money off of their houses, however, from my hundreds of files I worked on, this was rarely the case.  Most of my clients struggled to keep their home and often lost it or had to cash in their entire retirement plan to keep their home.  This meant they had no money to retire and had to work several years past when they should have.  

So there you have it. You should consider any asset that makes you money a good asset and you should consider any asset that costs you money or loses you money a bad asset.  You want to keep the good assets because they help you retire.  You want to limit the bad assets you take as they make it harder to retire.

Next lesson we will talk about how Family Law affects your retirement and what you can do about it.  If you have any questions about what we covered in this lesson please email us.

Retirement Vs. Equalization

Welcome to our Equalization and Retirement lesson.  I have a hard time deciding where to put this lesson.  I never know if I should put this lesson first as it is the main reason why any of this Part of the portfolio is important.  However, I feel you need to learn the basics of equalization and Assets vs. Debts first. 
This lesson is one of the most important lessons in the program.  Retirement is the make or break part of your separation.  I can’t tell you the amount of clients I have working into their seventies because of their separations.  I can’t tell you the amount of clients who had to go into bankruptcies because of their separations.  

Retirement and bankruptcies are the two most affected part of equalization laws.  This part is important to stress.  Your retirement is what is most affected from separation.  Therefore, retirement is your main goal when you separate.  Let me explain why separation and equalization law is all about retirement.  

There are four main ways in which people retire: 

  1. You may decide to purchase a house and work for the next thirty years to pay off that house.  You hope your house increases in value and Once you retire you can sell your house and live off the money your house gets you.
  2. You may decide to work for a company or government that has a pension plan.  If you work for that company long enough you can earn a pension and live off that income for the rest of your life.  
  3. You may decide to save money and invest your money in a retirement account.  Once you have saved enough money you can retire and start to draw on that money for the rest of your life.  
  4. You may decide to own a couple of rental properties and once you can earn enough money from them you retire.  You may sell off a couple of your rental properties as you get older and use that money to live.

You can decide to do any combination of these things.  But there is one common element that all of these plans have.  Every plan needs ASSETS in order to retire.  You either need a house, a pension, an investment account or a rental property.  Therefore, in order to retire you need to have these assets at the exact moment you want to retire.  

Another important factor is you need to have the right assets to retire.  No one can retire off of a car, a motorcycle, a four-wheeler and a boat.  If you keep buying the wrong assets throughout your career, you won’t have enough to retire.  This is why people struggle to retire in the best case scenarios.  Even a house can make retirement more difficult.  

So if you cannot retire without having enough assets, then what does Family Law do to your retirement?  Family Law takes away half of your assets.  This is the problem.  Family law forces you to take half of what your family owned before.  But Family law also forces you to decide what to keep.  Do you keep your four-wheeler, motorcycle, camper trailer and your boat, or do you keep the investment account.  A lot of clients decide to keep the wrong assets.  So not only do they lose half of their assets, they also decide to take the wrong ones.  These two decisions together make it almost impossible for them to retire on time.

So what happens when you take the wrong assets?  What happens when you don’t plan for your retirement? 

I had a client, let’s call her Layla, who owned a retail shop with her husband for several years.  They owned the shop’s building, which had a little apartment attached to it.  When they separated, neither of them could run the shop alone, they needed at least two people and they couldn’t afford a new employee.  They ended up letting it close and Layla moved into the one bedroom apartment.  Layla wanted to keep the building running and her husband left town.   She had to pay thousands of dollars every month to keep the building going.  She ended up going into more and more debt over the four years they separated.  Eventually she had over $60,000.00 in credit card and line of credit debt, all from keeping this massive building running.  

In the end, she had to sell the building.  What did she get for the building?  $120,000.00 in profit.  She was given $60,000.00 and he was given $60,000.00.  Since she racked up that debt after separation and she was the reason the building didn’t sell for three years, she was forced to pay for all of those expenses, her husband didn’t.  She ended up using her $60,000.00 profit to pay off her debt and her husband was able to keep the full $60,000.00.  

What went wrong here?  What went wrong was Layla fought to keep an asset that she should not have.  The building cost way too much to maintain and she did not have enough income to pay the maintenance costs.  She decided to go into debt to keep the building.  This cost her all of her equity and she ended up with nothing after separation.  

She should have planned to sell the building right away and move into a cheaper place.  She would have avoided her debt and would have been able to keep around $40,000.00 instead of $0.    She was in her late fifties and had no pension, and no savings.  She realized that she would not ever be able to retire.

My other client, let’s call him Jim, didn’t plan for his retirement.  In fact, he planned to work for a company, earn a pension and retire off of that income.  The problem was that his pension never paid him that much money.  He retired with a pension income of $25,000.00 a year in 2004.  fifteen years later and he was still earning around $25,000.00 a year.  What he didn’t plan for was his wife leaving him at age 79.  

He had to give his wife half of his pension and he couldn’t even afford to live in a one bedroom apartment anymore.  His problem was that he didn’t plan for his pension to be taken away.  He had no backup assets.  

I had another client, Jessica,  who worked hard as a nurse for over thirty years.  She owned a home and planned on retiring with a full pension in her home, mortgage free. What she didn’t realize was that her husband intended on separating with her.   She also didn’t realize that her husband secretly maxed their home line of credit to $100,000.00 over several years.  When they separated, she had to sell the house to pay off their mortgage and that debt.  She also had to give him half of her pension.  For compassionate reasons, which I will not get into, he was not punished for putting them in so much debt. 

She ended up as a sixty year old with no house, and half of a pension.  She planned on retiring at age 55 but won’t be able to retire until in her late sixties.  She also can’t afford to live in her own place and so she had to move in with her daughter to help save money on rent.  She is hoping to save up enough money in these next six years to have enough to get her own one bedroom unit.  

Jessica’s problem was that she did not plan for losing half of her pension and losing her house.  When she separated, she didn’t create a plan for minimizing her damage after separation.  She kept half of the house and half of the pension.  Should she have kept her entire pension and gave up the house entirely?  

My final client had it the worst of all.  I’ve discussed him in other parts of the program.  He earned roughly $130,000.00 per year.  His wife did not work when they separated.  He decided to leave so that his wife and his kids did not have their lives disrupted.  When I met him I told him to sell the house and the family van immediately.  He didn’t want to.  He hoped his wife would take over the van and he hoped that he could move into the house.  The problem was that his wife wasn’t paying for the van and she refused to pay for the house either.  He ended up paying for them every month.  A few months later, his wife asked for child support of roughly $2,000.00 per month.  He couldn’t afford to pay the child support because he was already paying almost $2,000.00 a month on the home and van expenses.  

At this time I told him to sell the house and the Van.  He still refused because he hoped that his kids could still live in the home and he knew the van would be best for them.  He instead, refused to pay child support for almost two years.  In the end, he couldn’t take over the home.  He had to list it for sale.  His wife also gave back the van because she said she didn’t want to take over the payments.  

What happened with the sale of the house?  Well, my client got into trouble for not paying his child support.  The law does not reward you for paying expenses.  But they do punish you for not paying support.  When the house was sold, he was forced to pay his arrears of child support from the sale proceeds.  This meant that his wife not only took her half of the sale proceeds, but she got a further $30,000.00 from his proceeds as well.   He was left with almost nothing and his wife was left with twice as much.

This client would be one of the people telling everyone that his wife got everything and he got nothing.  It’s true that his wife ended up with twice as much as him.  It’s true that she got to live for free for two years while he had to pay twice as much as he should have.  But what you don’t see is that it was his choice.  He decided to make the wrong financial choices.  In this case he knew the right thing to do and he chose the opposite.  

But in most cases, people don’t know what went wrong for them.  They don’t have a lawyer to show them what each asset does to their future.  I was only able to warn him early because I had already begun developing this program and I knew what would happen to him.  

Without this program and without planning for your retirement.  This can easily happen to you.  This is not the only client who lost everything from their separation. 

These are just some of the clearest situations.  I have had tons of clients who fought to keep the house they couldn’t afford, only to go bankrupt a year later.  I have seen clients fight to keep their cars, motorcycles, ATV’s and cottages and find out that they can no longer retire.  They all blame their separation but in reality it was their choices that got them in trouble.  If you do not plan for your retirement at separation, then you will likely not take the assets that best help you retire.  It is much easier to buy another car or an ATV, but it is much more difficult to build up a valuable asset such as a pension or investment account.


So let’s go over this lesson again.  We know that you need the right assets to retire.  We saw what happens to people who focus on keepin the wrong assets.  WE know that equalization forces us to lose at least half of your assets.  We know that we have at least some freedom to decide what assets and debts to keep.  We know that if we don’t plan on keeping the right assets then we can lose big.  Some of us won’t ever be able to retire and others will have to go into bankruptcy.  

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