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Couples caught up in the details of planning a wedding – especially during the pandemic lockdowns – often neglect to talk about money. That’s not surprising, since the Leger Discomfort Index, a survey of what makes Canadians most uncomfortable to talk about, showed that nearly one quarter of Canadians rated money at the top of the list. But after you’re married, you take up life as an economic unit, and personal finances suddenly become an important element of your life together. You don’t want any surprises, so put any reservations you have aside and a talk about it before you exchange vows.
It’s important to talk about your longer-term goals – for example, having children, basic childcare options, where you will live, how spending and income patterns will be affected. Determine how your partner handles spending and saving. Are they responsible about credit and debt? How do they feel about household budgeting? Who will handle the domestic bookkeeping – paying the mortgage and utility bills? It may seem like incredibly nitpicky stuff, but I’ve seen this sort of thing become a major issue between couples.
Lay out what each of you brings to the marriage. What does each of you own and owe? Are there assets with specified individual ownership and beneficiaries, such as RRSPs or trusts? Once you’re married, assets and liabilities are shared. Make sure everything is on the table now. Meet with your respective financial and legal advisors to sort out the details of beneficiaries to Tax-Free Savings Accounts, for example, and update wills.
Remarried couples frequently keep separate bank and credit accounts but have a joint bank account for household payments. If you or your spouse-to-be have pre-existing credit problems, it’s better to keep those segregated and get them cleaned up separately first, before dumping it all into a joint credit or bank account.
Remember, too, that any investments, real property, or business interests that you hold jointly become the property of both parties equally in a marriage. This is an important consideration if your spouse-to-be has undisclosed creditors or if the marriage breaks up.
You may both be active investors with aggressive styles. Very likely, though, one will be more conservative with a lower risk-tolerance level than the other. You will have to work with your financial planner to come up with a plan that encompasses all your combined assets as a total portfolio, and apply the principles of prudent asset diversification to your combined entire net worth to come up with a plan that encompasses all your combined assets and satisfies both of your investing styles.
Newlyweds, especially younger couples, typically have no life insurance. There’s usually no need for young singles to have it, as they usually have little or no asset base an no dependents. But as a married couple it make sense to have some form of term life insurance. That’s the most economical form of insurance and provides a good level of protection. For example, 10-year term life insurance is the most common, and may be made even more economical for a couple with joint first-to-die policy.
Couples with existing insurance coverage should discuss changing the beneficiary of their respective policies to each other, and may want to raise coverage, especially if planning a family. They should also look at any existing extended health insurance and disability to see if one or the other’s policy offers spousal coverage. That could add up to big savings on premiums.
If each partner brings considerable assets (or liabilities) to the union, typically in the case of second marriages, it may be worth considering a prenuptial agreement to get everything in writing. This type of legal documentation specifies everything you wish to do financially, and protects your legal interests should your marriage dissolve or should claims later be made against assets you’ve brought into the marriage. You’ll need a lawyer to draw up these types of agreements or other forms of documents specifying your respective interest in various types of assets.
A good financial planner will help couples identify and deal with these and many other financial matters before marriage, so they don’t become problematic afterwards. They’ll help you set up a plan, build an investment portfolio, guide you with insurance policies, tax matters, and estate planing to meet both your short-term and longer-term financial goals.
Robyn Thompson, CFP, CIM, FCSI, is the founder of Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management for high net worth individuals and families. Contact her directly by phone at 416-828-7159, or by email at rthompson@castlemarkwealth.com for a confidential planning consultation.
Notes and Disclaimer
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The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned are illustrative only and carry risk of loss. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact the author to discuss your particular circumstances.
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