Financial tips when getting re-married
The most recent information I could find on the divorce rate in Canada comes from the Employment and Social Development Canada web page and it was dated 2008. According to this source, 41% of marriages will end in divorce but the national average fluctuates between 35% and 42%. The average age of males getting divorced is 44 and that of females is 42. With just under 50% of marriages ending in divorce it is important that you are aware of things you need to do or look at when reviewing your financial plan after your divorce and before you get re-married.
Review the Wills
Getting divorced doesn’t revoke your will. Update your will at any point in your life when there are significant changes in your situation. Update your will when you get divorced, update your will when you remarry, update your will when you have children. When getting remarried, there might be children from your first marriage that you want to protect so an updated will can make sure your wishes are met and they are looked after.
Related article: How often should you review your estate plan?
Prenuptial Agreement Contracts
A Prenuptial Agreement is an American term. In Canada they are more commonly referred to as Domestic Contracts (However, I will use PRENUP as a catch all term for this article). People often head into second marriages with investments, businesses, homes, properties and other things so a properly drawn prenuptial agreement or a domestic contract should be in order.
A prenup is to protect what you have accumulated and have grown while you were on your own. A prenup is not saying that you won’t share your successes going forward with your new spouse but that you want to protect what you have acquired on your own. This also applies to people who are getting married for the first time. With people getting married for the first time at an older age, they too have accumulated wealth through home ownership, investments or business. Consult a Lawyer to discuss your specific situation.
Review your Beneficiary Designations
Update your beneficiaries on all of the products you own. Maybe you will need to change the appointment on things like Life Insurance, Pension Plans or RRSPs. Upon a review you may also find that you do not need to change anything. Review them and make sure the appointments meet your objectives. Don’t push the meeting aside and say that you will get to them later. Later may not come. Call your advisor to set up a meeting to review all of your beneficiary designations. Discuss all potential scenarios to prevent any surprises at your death.
Related article: Different types of beneficiary designations
Other things to discuss are bank accounts. Will they be joint or owned individually? Financial goals and aspirations. Is your new spouse more of a saver or a spender? Are you more of a saver or spender? If there is a significant difference in age, long term care planning is essential. Who is going to look after whom? How? Where?
As mentioned earlier, with all significant changes in one’s life, the complete planning process should be revisited. Upon a marriage breakdown and then an upcoming remarriage, it is very important to have these discussion because there can be a lot on the line if you pass away or the second marriage fails.