This weekend, I will be attending the wedding of a friend and colleague, which got me thinking about financial advice for newlyweds. But as I began putting this column together I realized that this material will be applicable for a lot of couples, not just newlyweds.
With marriage comes many financial considerations, and not just to the family budget. Obviously marriage is a fundamental change to your situation, and there are a number of financial things that you need to look at.
If you don't have a will yet, now is the time to get one. If you already have a will you need to update it because, except in specific circumstances, marriage after the will was prepared will nullify the will. Having a will is especially
important with blended families.
If you die without a will there are pre-established and inflexible rules set out by the government that will determine how your estate is settled. Even if, by coincidence, you want your estate divided exactly as the government sees fit, having a will can save your loved ones time and expense. As the old Nike ads say, "Just do it."
While I am on the topic of wills, make sure you get it done right. You can buy one of those will kits for around $30. I think that's dumb.
Estate planning can be complex, and you aren't trained in all the subtleties. Go see a notary public or a lawyer to get your will done right. It's a cheap investment given that this is the document that spells out your final wishes, and provides for them to be carried out in the way that you want and in the most efficient manner.
While we are talking about such pleasant things, make sure you talk to your spouse. Let them know if you want to be cremated, or where you want to be buried. Let them know if you want to be an organ donor. Let them know where the safety deposit box key is. Let them know if you want heroic attempts made to save your life if you are in a coma and you aren't coming out.
Tell them all the important stuff now, while you can.
Telling them isn't always enough, though. Look at a power of attorney to address medical and financial decisions that you would make for yourself if you were not incapacitated. In 2011, a new
Power of Attorney Act came into effect in BC. Powers of attorney signed before Sept. 1, 2011 will generally still be valid, but there are a number of changes in the new legislation, and it's a good idea to get a knowledgeable lawyer to
review any existing POAs.
And - for those about to take the plunge - pre-nuptial agreements.
A pre-nuptial agreement can be a sensitive subject, but in the cold, hard world of legalities and dollars and cents you might need one.
Pre-nuptial agreements protect both parties if the marriage fails.
They can save a lot of aggravation and a lot of legal bills if things don't work out. They can be especially useful if one spouse brings a lot more assets into the marriage than the other, or if there are kids involved.
It's true that the subject of a pre-nuptial agreement might cause a dispute before the marriage even starts. One person might take the opinion that if their future spouse is thinking about divorce already, then you are getting off on a bad foot.
But, even though people contemplate marriage with the best of intentions, the bottom line is that you do not know what the future holds.
It's a tricky situation, no doubt.
But that doesn't change the divorce statistics. Lots of people are going to get divorced - pre-nup or not - but the process will likely be much different with a pre-nup rather than without. Again, your legal professional can advise you on this delicate matter.
Now is the time to look at your income protection - your life insurance, disability insurance, critical illness insurance, and long-term care insurance. Your needs are different now, and you need to talk to a professional insurance agent.
Also, check out what spousal benefits are available through your
employee benefits package at work.
That's a lot of talking to people already, and we aren't done yet. While you are talking to your spouse, have a talk about money. Each person needs to know where the other is coming from, even when it comes to making basic financial decisions.
Money is one of the biggest causes of stress in a marriage, and its one of the leading causes of divorce.
Are you going to share financial decisions, or is one person going to handle the family finances? Is one person a saver, and one person a spender? You are almost certainly going to need some give-and-take here, so make sure you know what's important about money to your spouse, and that they know what's important about money to you.
Pretty serious stuff this week.
Here's a little wedding humour to lighten the mood.
A little boy was in a relative's wedding. As he was coming down the aisle he would take two steps, stop, and turn to the crowd (alternating between bride's side and groom's side). While facing the crowd, he would put his hands up like claws and roar loudly.
So it went, step, step, ROAR, step, step, ROAR all the way down the aisle. As you can imagine, the crowd was near tears from laughing so hard by the time he reached the front. The little boy, however, was getting more and more distressed from all the laughing, and was near tears himself by the time he reached the pulpit.
When asked what he was doing, the child sniffed and said, "I was being the ring bear."
Okay, now go do that stuff I told you about.
The opinions expressed are those of Brad Brain, CFP, R.F.P. CLU, CH.F.C., FCSI. Brad Brain is a Senior Financial Advisor with Manulife Securities Incorporated, in Fort St John, BC. Manulife Securities Incorporated is a Member of the Canadian Investor Protection Fund. Brad Brain can be reached at
[email protected] or www.bradbrainfinancial.com.
