Money before Matrimony

This is the beginning of a brand-new
segment on the show called Money Talk Life.

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And we are so excited to bring it to you.

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Every second week on the show, we're going
to be getting personal about your lives--

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what's going on in your money.

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So this week, it's about money
and matrimony, and having

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a money talk with your spouse-to-be before
you walk down the aisle or move in together.

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And that's about as personal as it gets.

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But Nicole Ewing, tax and estate planner
at TD Wealth, says not having that talk

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could cost you your
happiness and your wealth.

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So I asked Nicole, what are the
five things every couple should know

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before they decide to be together forever?

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And she said the first one was to have
a prenup or a cohabitation agreement.

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Without those, then we have default rules.

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And whatever jurisdiction you're in, whatever
province you're in, or country you're in,

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those are the rules that are going to apply.

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So in Ontario, for example, at the time
of marriage, all of your future assets

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become joint.

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Yeah.

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And the accrued value of the time
you're together is shared equally.

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If that's not what you intend to have happen,
then you need to contract out of that,

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and say you want something
different to happen.

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Even if you are comfortable with the
default rules that exist in the jurisdiction

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that you're in, you may want to consider, are
we going to retire in a different province?

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Maybe we're gonna retire in British Columbia,
where the rules are very, very different.

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Or Florida.

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Exactly.

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Yeah.

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And so it's worthwhile going
through the exercise of laying out

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exactly what you want to have happen.

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One thing that-- as part of this first
tip, as well, is there's, you know,

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there's cohabs and prenups,
and there's postnups.

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There are postnups, yeah.

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What's a postnup?

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So, a postnup is essentially a marriage
contract that's entered into after marriage.

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We have to be careful in that if you
already have rights, then we don't want to--

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they're going to be looked at
a little bit more carefully.

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Right.

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You don’t want to take away--

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Exactly.

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Right.

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But if there's a point at
which, in the relationship--

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business owners often have this happen--
where their partners may require them

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to enter into a business agreement,
and say we're not going to enter--

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we're not going to do
business with you unless you

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commit to entering into an
agreement where your spouse is not

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going to become my future partner.

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Now, the other thing you
talk about with the prenup

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is it's not just for when
you break up, but it's also

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about how you do things when you're together.

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So, I want to borrow a lot of money,
and I want to invest in penny stocks,

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you're saying not so much.

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Exactly.

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So you can-- obviously, the agreement
is going to touch on the big things,

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the his, hers, ours.

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But you can talk about how much
debt you're willing to take on,

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or your partner is going to take on.

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I think with things like
if we say that everything

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is going to be equal but I'm not
going to help pay for your child

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to go through university, but if you then
pay for your child to go through university

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and all of my money is saved and
invested, that on breakup we're

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going to split the money that we've saved and
invested-- or that I've saved and invested.

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So I've essentially subsidized
your child to go to school.

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So if that's not my intention, that
can be laid out in the agreement.

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You can lay out how often you're going
to have these discussions, whether you're

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going to review them, who's
responsible for paying

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the bills, who needs to actually get out the
checkbook and pay those bills each month.

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So right down to the nitty gritty.

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Your second one here, which is always
fascinating to me, is full disclosure.

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And I think about this about
almost like going to the doctor

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and not telling a doctor how you're doing.

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But you bring up a good
point, too, there's reasons

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why people may not disclose everything.

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People are embarrassed.

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And it may not even just be that they
are trying to withhold that information,

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but it might be something that they're
just really not comfortable talking about.

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So if they have obligations
to an ex-spouse, for example,

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and there's a separation
agreement in play, they

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may not want to dredge
up those conversations.

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They could be embarrassed if
they've made poor decisions,

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if they invested in the penny
stocks and it didn't work out,

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and they don't want to admit
that they've not done well.

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So, it can be a challenging conversation.

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But definitely if you don't share full
disclosure assets, liabilities, obligations,

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the agreement can be set aside.

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It can be void.

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Pretty good incentive.

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Third one here is to review your documents,
and make sure that your agreements reflect

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consistent intentions.

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What do you mean by that?

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So, there's a number of documents that
govern the obligations and the rights

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that we have to ourselves and to others.

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We have wills, powers of attorney, separation
agreements, marriage contracts, perhaps

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business agreements.

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And all of these could actually
be speaking to the same issues.

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And we want to make sure that
there's consistent intention,

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so that your beneficiary
designations are the same on the plan

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document as they are in your will as
they are reflected in your separation

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agreement or your marriage contract.

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So, people can sometimes
get a little bit confused.

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And I see this over and over again.

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In separation agreements, it will outline
that you need to maintain insurance

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for the benefit of a child.

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And people forget why they
have that insurance in place,

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but the agreement says if you don't maintain
that insurance and keep it in place,

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and if you were to pass, then that child
has first claim against your estate.

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If you haven't planned for
that in your other documents,

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the your spouse could
actually end up receiving less

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than you intended them to receive.

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So, it's important to look
at things all together

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and make sure that your
intentions are consistent.

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Yeah, they're all moving
in the same direction.

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Fourth one here is understand that your
actions and decisions have consequences.

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And what do you mean by that?

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So, we've gone through the good talk.

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We've put the agreement in place.

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And now we go off to the bank and
we say, let's make our assets joint

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for a million different reasons.

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For ease of administration.

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And that could actually put off side
the plans that you had in place.

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So, a client of mine--

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he had actually come to
me to talk about wanting

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to make sure that, if
something were to happen,

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he would be able to provide for his children.

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And he didn't want everything
going to his spouse.

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And he had a prenup
agreement in place, and it

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said that the business assets
are kept separate and apart,

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that they're not to be exposed
in case of a marriage breakdown.

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But he had sold his business,
and he had taken those assets,

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and, for a variety of reasons, he'd put
those assets in joint names with his spouse.

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So he had actually undone what
the agreement had in place.

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That preceded, or it took
precedent over the other.

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Yeah.

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And he had also put assets in trust,
these informal in trust accounts,

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with his kids and his kids' names.

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Well, they were over 18, so
those assets were the kids'.

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So he actually didn't have the assets
that he thought he had in place.

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Wow.

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Mhm.

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Not a great surprise on that one.

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No.

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No.

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Final tip is insurance.

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Yes.

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What about insurance?

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It's just a really great tool to
keep things simple and certain.

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So you can, either with
a spouse or child, if you

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know upfront I want to
provide for my spouse, I

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want to make sure that they're taken
care of throughout their lifetime,

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but I don't want to give
up all of these assets--

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I want my children to take these assets--

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then we put in place insurance
policy, a particular amount, done.

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Vice versa, you can do
that for your children.

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Say, I want my children to be provided
for, to receive a legacy from me,

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but I want my spouse to be able
to live the lifestyle that we'd

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been living before, having access to
all the assets that they had before.

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So we put, again, an insurance
policy specific amount in place.

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And we have certainty, and
it's nice and clean and easy.

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Nicole, thank you.

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Pleasure.

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Now, if you would like to hear more
about this, check out this article.

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It's called Money Before Matrimony.

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And you can find out how to have those money
conversations with your significant other.

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And you can find this article and many more.

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We're gonna show you how to do that.

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Go to moneytalkgo.com/life.

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And there, you're gonna find all sorts of
articles on everything from divorce, kids,

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whether your kids can afford
the family cottage, even how

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to navigate the tricky
world of figuring out who

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gets what when you are planning your estate.

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There's a good one there
called The Family Bargain.

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We've got videos.

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We have articles on everything from
housing, retirement, family, everything

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that is important in your life,
and how money plays into that.

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Once again, it's moneytalkgo.com/life.

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And we can't wait for you
to check it out there.

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And we're gonna have it here
on the show every second week.

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Lots of information that you're
gonna be coming your way.