It is both an emotional and a financial strain to go through a separation/divorce settlement.  It is definitely not simply a matter between you and your ex; the tax man might get more than his fair share if you don’t navigate it carefully.

To help you understand the issues, consider the following checklist:

Locate a copy of your signed marriage contract or cohabitation agreement – this may reduce your financial exposure. But if you do not have one signed, it is too late!
Options available in connection with a separation/divorce – lawyer/court, mediation, arbitration and collaborative family law. The professional fees and time involved might be considerations in deciding on the chosen approach. Speak with your lawyer to get the pros/cons of each option.
List of assets – compile a list of assets (home, cottage, investment/bank accounts, dental practice, life insurance policy or any other valuables) you and your spouse own and the associated debts outstanding.
Notify your financial advisor/banker – this avoids one party stashing cash away i.e. protect your assets.
Dental practice – your most valuable asset; valuation often becomes the number one issue in the settlement. Consider a professional valuator to valuate your practice.
Matrimonial home/cottage – who is to stay? If this property becomes part of the equalization, there should be no immediate tax implication as the gain may be sheltered by the principal residence exemption. If exemption is not available, one could choose to transfer the property without any immediate tax consequence i.e. at cost. Taxes will be payable in the future if the property is sold at a gain by the recipient.
Investment accounts – How to split? Again, if this becomes part of the equalization, there should be no immediate tax implication; the transfer normally occurs at the cost i.e. whatever price you paid for those investments. Any income or capital gains realized in the future will be taxed in the recipient’s hands.
Registered Retirement Savings Plan – How to split? Should have no immediate tax implication if the transfer is properly documented in the separation agreement and a certain tax election form is filed.  It is important that your accountant is aware of your separation/divorce settlement such that the election is properly prepared and filed. Make sure you update the name of the beneficiary for those RRSP’s that stay under your own portfolio.
Spousal support payment – In general, such payment, if made on a periodic basis (e.g. monthly) pursuant to a court order or written separation agreement, is tax deductible by the payer and taxable in the hands of the recipient only.  That means if you pay a lump sum payment up front, you might not be able to claim a deduction.  The separation agreement must be clear that the payments are for spousal support; otherwise they might be treated as child support.
Child support payment – How much is required? There are guidelines available to determine the monthly amount required. It is non deductible by you (the payer) for tax purposes.
Equivalent to spouse credit – who is to claim? If you have joint or shared custody of your minor child/children, you have to decide who is eligible to claim the credit.  It is best to state this in the settlement agreement to avoid any future argument. It is important to note that if you are paying child support payments, you are not eligible to make such a claim.
Child care expense – if you share custody, each party could claim the amount incurred subject to the limit stipulated by the Canada Revenue Agency.
Tuition and education credits – the student could transfer up to $5,000 to either parent regardless of who actually paid for the tuition.
Legal fees – relating to obtaining a divorce or division of property are not tax deductible. Legal fees paid to obtain an order for child support or to enforce an existing right to spousal support should be tax deductible.  However, legal fees relating to an increase in spousal or child support would likely not be tax deductible. Wills/power of attorney – it is a perfect time to have them updated.
Wills/power of attorney – it is a perfect time to have them updated.
Life is full of ups and downs; have your advisors with you along the way to smooth out any wrinkles.