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Love and Money
Boomers’ love lives create financial planning challenges
By Christine Van Cauwenberghe
With divorce rates on the rise and traditional marriage
on the decline, the number of middle-aged
Canadians in common-law unions increased dramatically
between 2001 and 2006, far outpacing the
growth of married couples in the same demographic.
In the five-year period leading up to the 2006 Canadian
Census, the number of 55 to 59 year olds in common-law
relationships increased 63.9 per cent. Growth was even
quicker — clocking in at 77.1 per cent — among
Canadians aged 60 to 64.
But these new relationships aren’t as clean-cut as one
might assume. Many fall into “grey areas,” complete with
children from previous marriages, unfinished separations,
and divorce — all of which can have a significant impact
on the new family’s financial and estate planning realities.
This creates an interesting challenge for Canadian
boomers and their financial advisors.
The truth is the boomer generation has embraced
“grey area” relationships at a time when they are earning
and inheriting more money than ever before. It’s critical
that they take all steps necessary to ensure they understand
and address the legal, financial and estate planning
July/August 2008 • 29 • Fifty-Five Plus Magazine
realities of their living situation.
Partners entering a common-law or
non-traditional partnership may come
into their relationship with different
financial resources,objectives and obligations
— especially in cases where one or
both partners were married previously.
When entering this type of living
arrangement, it’s often wise to have a
thorough, frank discussion about each
partner’s expectations and responsibilities
for financial and other affairs for the
new “family.”
Once you’ve had that conversation,
consider taking some wise next steps:
A good first step is to consider each
partner’s expectation for how the family
will spend, save and invest its money.
It’s often wise to see a lawyer or
notary who will help you prepare a
cohabitation agreement, which can
define the financial terms of your relationship.
Often attached to this agreement
a list of each partner’s assets, liabilities and personal
effects.
A notary or lawyer can also help partners update
their last will and testament and also update beneficiaries
for their RRSPs and insurance policies, while also providing
advice on resolving legal issues, such as who will be
granted power of attorney for health and financial affairs.
Common-law couples, as defined by the Income Tax
Act, benefit from the same tax advantages (and disadvantages)
of married couples, so it’s wise to speak to speak to
a financial planner about the tax implications of your common-law
union.
THIS COLUMN PRESENTS GENERAL INFORMATION ONLY
AND IS NOT A SOLICITATION TO BUY OR SELL ANY INVEST-
MENTS. CONTACT A FINANCIAL ADVISOR FOR SPECIFIC
ADVICE ABOUT YOUR CIRCUMSTANCES. SOURCE INFORMA-
TION WAS PROVIDED BY INVESTORS GROUP.
Christine Van Cauwenberghe is Director, Tax and Estate
Planning, at Winnipeg-based Investors Group.