Marcy Segal – Are Inflation, Rising Costs, and Interest Rates Affecting Divorce?

February 1, 2023 Posts No Comments »

If you’ve had to manage the finances for your household, you’ve noticed that everyday items have become much more expensive. Canada is facing a period of rampant inflation and rising costs. To help curb this, the Bank of Canada has been raising interest rates which will make things considerably more expensive for anyone who needs to borrow money. At first glance, this may not seem to have much to do with divorce or family law dynamics, but the fact is that these rising costs have a considerable impact. Here’s why.

Divorce is expensive.

When two people go from being a couple to being two singles, their combined expenses inevitably go up. Instead of one monthly mortgage or rent payment, there are two. Instead of one set of utility bills, there are two. You can end up spending more money on transportation, entertainment, and more. With this, you may need two of many everyday items if there are children from the relationship.

And this doesn’t even consider the actual cost of filing for divorce and any spousal or child support that the court may order.

It is unsurprising that with rising inflation, we have seen a lowering of the divorce rate. According to recent data from, the divorce rate has declined from its peak in March 2021.

Inflation can complicate appraising assets.

When you get divorced, the assets of you and your spouse are in most cases, divided equally. Inflation, however can often complicate this process. For many years, the price of homes has been on a steep rise, although recently the market has started to cool. If you had your home appraised just a year ago, its value today may be much different.

Before beginning your settlement negotiations, it is advised that you take a complete inventory of your marital estate and have it appraised. Because we are in a period where the cost of goods is rapidly changing, it is advised that you appraise your martial wealth more than once – especially if your divorce process is a long one.

You may lose on your investments.

Another type of asset that gets divided during a divorce are investments like RRSPs, TFSAs, and non-registered investments. Typically, these will need to be cashed out at market rate and then reinvested in a way that is deemed to be fair.

Unfortunately, over the last year, the markets have not faired very well, so the market value of those investments may be less than you thought and withdrawing them early could cause you to have a net loss.

What can you do? 

Suppose your marriage truly is over and you are going through the divorce process. In that case, you should do so with expert advice from professionals such as an accountant, a financial advisor, and a family lawyer who can help you mitigate the financial impact and help ensure that you are protected as best as possible. Divorce is never easy, but in today’s economic climate, it can be even more of a challenge.

Contact me today

If you require a family lawyer to help you through your divorce process, contact me today

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