INFocus: Financial independence: Not only for singlesDate: July, 2014
In 2008, StatsCan reported that there were 70,226 divorces in Canada and 43.1 per cent of marriages were expected to end in divorce before their 50th wedding anniversaries. Most people want a long and happy marriage. Certainly, no one wants to think about separation, divorce or out-living his/her partner. Yet, given these statistics and the facts of life, this is a reality for many Canadians. So it is not surprising that many individuals find themselves suddenly responsible for managing their finances after years of depending on their partners.
Rather than waiting to see what eventualities may come your way, now is the time to be proactive. You can start by taking careful steps to ensuring your financial stability in the future, no matter how your “ending” may turn out. Whether your nuptials end in divorce or death, with some prep work, you will already have an adequate understanding of your financial situation. Here are five things you can do today:
Document all of your expenses
Make a list of all the accounts you have together and individually: bank, savings, investments, RRSPs, everything. Then make another list of the monthly expenses associated with each account. Some couples are uncomfortable with discussing money, but you both need to know how much it costs to maintain your lifestyle. How much is the mortgage payment? Property tax payment? Car payment?
Build a credit history
Make sure that a few of the bills are in your name and that you have at least one credit card in your name. You need to build a credit history; and if you have no bills or credit cards, you may find it difficult obtaining credit should your situation change.
Speak to a family law lawyer
People do not get married planning to get divorced, but realistically speaking it is a possibility. Before getting married, many people are unaware of what happens to their assets and debts. For example, they may not know whether an inheritance is part of the “shared” assets or not. The good news is a lawyer can walk you through these scenarios and explain how you can protect yourself and your partner.
Many of us have heard the story: John Doe marries Jane Smith. They divorce and he then remarries. A few years later, John passes away suddenly and his will was never updated. Everything was left to his first wife Jane Smith. His current wife Jean Fox and his newborn daughter are left with nothing. These unfortunate situations happen more often than we think. If people would stop putting off important things like updating or creating a will, these types of tragedies can be prevented. It is crucial that you sit down with your partner; make sure that you are clear on what happens to the assets when either one or both of you die. Following your discussion, the two of you should meet with a lawyer to make any necessary updates and ensure that your wills reflect both of your wishes.
Become acquainted with your financial advisors
Get to know your financial advisors: Attend meetings with the investment advisor, accountant, and lawyer who are handling your joint assets. This will keep you aware of what is happening with those assets for now and planning for your futures.
Your team of advisors can assist you with the five challenges above and some other planning areas as well. If you are missing an advisor on your team, the others will be able to put you in contact with someone in that field. A good team of advisors works together to make sure that the advice you receive is proactive, well rounded and compliments your goals in other areas of your life.
Connect with the Author
Chandor Gauthier is a partner in Crowe Soberman’s Audit & Advisory Group. She is experienced working with clients in a broad range of industries, including manufacturing, retail and real estate.
This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article.
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