Statistics show that more Canadians are divorcing, remarrying and living common-law than in the past. Couples in second marriages or who are common-law can have a unique set of financial planning challenges that differ from their longtime, first-marriage counterparts. Perhaps the most difficult issue is the one that nobody likes to talk about — estate planning.
Here are some of the most common estate planning mistakes made by these couples and how to avoid them.It is not uncommon for common-law spouses and couples in second marriages to hold real estate as tenants in common, particularly if they have children from other relationships. This differs from the typical joint ownership structure called joint tenancy, whereby a survivor becomes the sole owner of an asset upon the death of the other owner.
One valuation option may be to obtain two independent appraisals, with the purchase price being the midpoint of the two. A notional real estate commission based on the customary rate in the province of residence could also potentially be included in this calculation.The Goldilocks principle often applies to estate planning for couples who each have their own children.
At the other extreme, if you do not provide sufficiently for your partner in your will, they could be in an unfortunate financial position as a result of your death. If a couple has one partner with less assets as retirement approaches, they may feel compelled to work longer than they would otherwise if they had more confidence in their financial security in the event the other partner died.