Divorce is one of life’s most emotionally challenging transitions — but it also carries serious financial consequences. A recent Wall Street Journal article by Joann S. Lublin identified five common money mistakes people make during divorce, and these lessons apply just as powerfully here in Ontario.
At Russell Alexander Collaborative Family Lawyers, we regularly see clients face these pitfalls firsthand. Whether you’re negotiating a separation agreement or preparing for court, avoiding these errors can save you time, money, and long-term regret.
1. Overspending After the Split
In the immediate aftermath of separation, some individuals try to “reset” their lives by making big purchases — like a new home, car, or luxury items — often without a clear financial plan. In Ontario, where real estate and living costs are high, this can quickly drain resources.
Judges and lawyers frequently see parties struggle financially post-split due to inflated lifestyles that no longer reflect reality. In family law mediation and litigation, a failure to budget can lead to spousal support challenges and even enforcement issues down the road.
2. Failing to Identify Hidden Assets
Hiding money or undervaluing property isn’t just unfair — in Ontario, it can have legal consequences. While the Family Law Act requires full financial disclosure, some spouses still attempt to obscure assets like crypto, private shares, or offshore funds.
Financial disclosure is mandatory, and incomplete information can result in cost penalties or even a reopened agreement later. Hiring forensic accountants or using court disclosure mechanisms may be necessary if you suspect hidden income or assets.
3. Letting Emotions Drive the Process
Divorces can become drawn-out battles when driven by anger, guilt, or revenge — instead of focusing on fair resolution. Emotions increase delays and legal costs, especially when parenting and property disputes escalate.
Ontario’s family courts are already backlogged. Unnecessary conflict not only drives up legal fees, it slows outcomes for everyone. Alternatives like collaborative family law or mediation can help reduce emotional and financial damage.
4. Mishandling Complex or Illiquid Assets
In Ontario divorces, things like pensions, RRSPs, and business equity are not always easy to divide — but they carry significant long-term financial weight. Poor planning around these assets can result in unequal settlements or major tax consequences.
Equalization of net family property is a core concept in Ontario law, but not all assets are created equal. You’ll need accurate valuations and a lawyer who understands the tax implications of trading illiquid assets (e.g., keeping the family home in exchange for retirement savings).
5. Underestimating Post-Divorce Expenses
Splitting into two households isn’t just emotionally difficult — it’s expensive. Many clients overlook the full costs of day-to-day life on a single income, especially when children are involved.
Support guidelines help calculate child and spousal support, but many underestimate the real cost of rent, food, utilities, extracurriculars, and insurance. A financial advisor or family lawyer can help build a realistic budget before finalizing your agreement.
Final Thoughts: Get Informed, Get Help
Ontario families navigating divorce need to approach finances with clear eyes and proper guidance. While separation is emotionally charged, your financial decisions today will affect your well-being for years to come.
Working with an experienced family lawyer can help you:
- Protect your legal and financial rights
- Avoid costly missteps
- Make strategic, informed decisions for your future
This post is inspired by Joann S. Lublin’s Wall Street Journal article, “Five Common Financial Mistakes People Make When Getting Divorced,” published June 4, 2025.
Ontario-specific legal commentary provided by the team at Russell Alexander Collaborative Family Lawyers, serving clients across the province with offices in Toronto, Whitby, Markham, and beyond.