Would you mind the government managing your affairs?
When we get into a car, we know there's a possibility of an accident. We won't get into a crash every time, but we have car insurance and wear a seatbelt just in case.
Death is the only thing in life that is certain, but many things are a gamble. Acknowledging and preparing for potential outcomes do not make them more likely, and we should do our part to protect our loved ones in the process.
Ensure you have your legal ducks in a row; including a Will, a Power of Attorney, and a cohabitation or prenuptial agreement. These documents outline how you want to manage your home, your health, your kids, and everything else. Without one, everything in life will be managed according to the government's terms and conditions.
These determine what you want to do in the worst-case scenario. So if you are unconscious in the hospital, your next of kin will be responsible to make decisions about your health. But what if you don't want that person to make the call? That is why you create a Power of Attorney, one for your person and another for your finances. This can be a parent, your partner, or your lifetime best friend, but since you are giving them agency to control your body and assets, choose someone you trust to act in your best interest.
Take a look at the chart below from prenup.ca and consider if any of these apply to you or your partner:
Not every relationship is meant to last, and we know even the best friendships and marriages can fall apart. In Canada, 40% of marriages end in divorce, yet only 8% of the population has a prenuptial agreement. It is a tough conversation to have and some believe it's betting on failure. However, some of us wait until we are older and established before marriage. We have more to lose going in, whether it be a house or a business in our name. Maybe this is not your first time down the aisle, and with kids and careers in the mix, a prenup allows you to share a vision for your future family.
How will you communicate with your spouse to model a healthy relationship for your kids?
What religions will be practiced in the household and where are you spending the holidays?
How will you divide household labour and who stays home when your child is sick?
Where do you want to live and who works outside the home to support the family?
These are just some of the questions to discuss with your partner before you choose to spend your life with them. You want to ensure you are on the same page to build the right foundation for the entire family, and it's an easier conversation to have when you are coming from a place of love and growth rather than the anger and spite that can come out during a divorce battle in court.
If you live with your partner but never plan on getting married, you may consider a cohabitation agreement. For tax purposes in Canada, if you are living with your partner for over a year, you are in a common law relationship whether you have accepted a formal marriage proposal or not. In Ontario, you may be eligible for spousal support if you have lived together for over 3 years or have a child and a cohabitation agreement can state the terms of spousal and child support. However, equitable division of assets only applies to married couples, so each partner in a common-law relationship is only entitled to whatever they brought in or acquired during the relationship. In addition, only married spouses are entitled to an estate if a partner passes away without a will.
It's important to update your legal documents any time your circumstances change, so if you recently got married, had a child, or have a new career trajectory, it's time to review your plans to protect what matters in your life.