Pride Month: Wealth planning for modern families

Same-sex married couples in Canada have had similar legal rights as opposite-sex married couples for more than 15 years now.

Since the federal Civil Marriage Act came into force in 2005, legalizing same-sex marriage across Canada, the number of Canadians who have identified themselves as being in same-sex relationships has risen: According to the latest census, there were 72,880 same‑sex couples in Canada in 2016. From 2006 to 2016, the number of same‑sex couples increased faster (60.7 per cent) than the number of opposite‑sex couples (9.6 per cent). About two-thirds of same‑sex couples in Canada were in common-law relationships, the census shows, which represented about one-fifth of all relationships.

It’s the common-law status—regardless of sexual orientation—that can present obstacles with financial and estate planning, says Jag Gandhi, vice-president, wealth planning at Gluskin Sheff.  “And the definition of common-law, and how it applies, can vary from province to province,” Gandhi says.

Common-law partners should also be named on the power of attorney documents for property or personal care in order to make it clear who has authority to make decisions in case of incapacity.

It’s why everyone in a common-law relationship should have a proper estate plan, to ensure their wishes, both during their life and after they die, are met.

“You need to have the basics, such as a will and powers of attorney, and making sure that beneficiary designations are up to date,” Gandhi says. “It’s the best way to help mitigate potential conflicts later on.”

“Common-law couples will also want to consider entering into a co-habitation agreement if they own shared assets, such as a house, in the event of a breakup,” Gandhi says. “Common law partners  don’t have property rights against each other under Ontario’s Family Law Act, but they can make support claims against each other after a certain period of time.”

Same-sex couples may have situations that require extra or special planning, such as navigating complicated dynamics with family members who may not be accepting. Gandhi recommends people talk to experienced legal professionals in their province to help them navigate through their particular situation.

When children are involved

Financial and estate planning becomes more complex when children are involved, which can become increasingly more complicated for same-sex couples.

Gandhi says a will is a good way to protect and provide for children and to ensure that no child is inadvertently missed. For instance, for a same-sex couple who are raising a child and only one of the partners is the biological parent of the child, it’s important the will provides some direction with respect to guardianship for the child and perhaps adding a trust under the will with certain provisions to ensure the partner remains in contact with the child if someone else was to become their guardian.

“It just requires a little more careful planning to ensure that the people you want to take care of your children are properly included,” Gandhi says.

It’s also important to remember just because same-sex marriage is legal in Canada, it doesn’t always mean family members are supportive. Custody battles over non-biological children, family members who don’t recognize the union or family attempts to interfere with a spouse’s ability to make medical and financial decisions for their spouses are common occurrences that require foresight and planning.

Too often, Gandhi says people avoid having these tough conversations, but she believes they’re necessary along with a well thought out financial and estate plan.