A few years ago a friend and her husband separated. It was a relatively amicable divorce as divorces go. She owed him spousal support which is unusual but not unheard of. She also transferred some assets to him as is also normal.

The sad thing is that she felt she had to cash in her RRSPs to pay the legal bills. Now in her 50's,  she is starting over to save for retirement.

What could she have done differently?

I don't know all the details but my first thought is why not take a loan? Even if interest rates were high, they would be less than the 50% tax she is paying on her RRSP. It would take a long time for the interest to total up to the tax she will pay this year.

Maybe she could have paid off the bill over time? I don't know.

What I do know is that if this ever happens to you, make sure you talk it through with someone with experience and who knows you. Brainstorm all the potential options before deciding on such an expensive one.

Then take a deep breath and do what you have to do.

And by the way...

This is not the first time I have heard this exact same story. And it won't be the last. 
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I heard a very sad story the other day.

A young man in his mid-30’s died in his sleep. He left a wife and baby. 

It turns out he did not have a will, he was self-employed and did not have employment income – he took dividends from his company. As a result his wife and child will not receive survivor’s benefits or orphan’s benefits. He had not filed his personal income tax return for years. He did not have life insurance either.

AND he was a LAWYER!!!

What the heck?!?

Of all people who should know better, you would think a lawyer would. But when I tell the story, it seems that they do not.

Everyone should have a will to make sure the money goes where you want it to go. If you don’t, the government may take over the management of whatever is left.

Make sure you think through the consequences of all your financial actions - saving income tax today may cause hardship for you and your family down the road. Take a look at your own situation. Review it with your accountant or financial advisor or lawyer or financial success coach.

​Make sure your ducks are in a row.

Leave your family with peace of mind.

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