Financial tips for common-law relationships

Ten tips for dealing with finances in common-law relationships

If you’re in a common-law relationship, it’s becoming more common.

The latest Census figures show that the number of Canadian common-law couples rose 13.9 per cent between 2006 and 2011 — that‟s about 4.5 times the rate of growth for married couples (at 3.1 per cent).

Your professional adviser can tell you the specific financial issues relating to common-law relationships. Here are 10 to consider:

1. According to the federal Income Tax Act, a couple is considered to be in a common-law relationship if they have lived together in a conjugal relationship for a period of twelve months or have lived together for a shorter time but are raising a child together. For income tax purposes, they are treated the same as a married couple.

2. If you meet the test for being considered a common-law couple under the Income Tax Act (Canada), be sure to file your income tax returns as a couple. Filing as individual could result in consequences related to filing a false return, and could also potentially result in the loss of various federal benefits, including the CPP survivor benefit.

3. The law in many provinces does not give common-law couples the same rights as married couples. For example, in Alberta, New Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Québec and the Yukon, common-law partners whose relationship breaks down do not have any statutory right to a division of property, no matter how long they have lived together.

4. You and your common-law partner should discuss how you will reconcile your individual financial objectives, resources and obligations should your relationship come to an end. Consider writing down your intentions regarding a potential division of assets in a cohabitation agreement. Attach your agreement to a list of each partner‟s assets and personal effects.

5. Discuss how much you expect to spend, save and invest and who will manage your shared finances, including paying the bills and splitting household expenditures.

6. Make sure you each have a valid will that reflects your rights to property division in your province of residence. Given the frequency of changes in the law in this area, it‟s crucial that you speak to your legal and financial advisors regularly and update as required.

7. Review and revise as necessary the beneficiaries for your life insurance policies and registered investment plans.

8. Designate a power of attorney to act for you should you become mentally incompetent.

9. If you have children from a previous relationship, be sure that they are included in your estate plan. Leaving everything to your new spouse through direct beneficiary designations could inadvertently disinherit your children. You should speak to your legal and financial advisors to ensure your children are covered.

10. Don’t make the ‘common’ mistake of solving all your financial complexities on your own. Professional financial and legal advisors can also be your effective partner in achieving all your life goals.

J. Kevin Dobbelsteyn is a certified financial planner with Investors Group Financial Services Inc. His column appears every Wednesday.

Just Posted

BC Hydro increasing flow in Puntledge River

BC Hydro is warning the public to stay away from the Puntledge… Continue reading

Comox Valley Regional District announces key water treatment project land acquisition

District buys land from Courtenay and District Fish & Game Protective Association

Winds of up to 90 km/hr forecasted to hit Vancouver Island

Environment Canada is warning that loose objects may cause damage

VIDEO: Humpback whale plays with a log near Comox Harbour

On Dec. 2, Lifeforce Ocean Friends found a four-year-old humpback named “Lorax”… Continue reading

Seasonal favourite comes to the Sid Williams Theatre

Many of us can remember a favourite Christmas gift - what is… Continue reading

VIDEO: Close encounter with a whale near Canada-U.S border

Ron Gillies had his camera ready when a whale appeared Dec. 7

North Okanagan site of first RCMP naloxone test project

Free kits, training to be provided to high-risk individuals who spend time in cell blocks

1 arrested after bizarre incident at U.S.-B.C. border involving bags of meth, car crash

Man arrested after ruckus in Sumas and Abbotsford on Thursday night

More B.C. Indigenous students graduating high school: report

70% of Indigenous students graduated, compared to 86% across all B.C. students

Union, CVRD reach tentative agreement

The Comox Valley Regional District and the United Steel Workers (USW) Local… Continue reading

2 facing animal cruelty charges after emaciated dog found in B.C.

Amy Hui-Yu Lin and Glenn Mislang have been charged with causing an animal to continue to be in distress

Out of the doghouse: B.C. city lifts ban on pup who barked too much at dog park

Cameron the Shetland sheepdog is allowed back into Uplands off-leash dog park under some conditions.

No flood of extremist returnees to Canada expected, federal report says

The report says some 190 people with connections to Canada are suspected of terrorist activity abroad

Canada-China relations turn icy over arrest of Chinese exec

The Huawei case has threatened to complicate U.S.-China efforts to resolve a bitter trade dispute.

Most Read