Getting hitched creates challenges

Getting married, or moving in with a partner, might be an exciting step in life, but it does create some new financial and tax planning challenges.

Getting married, or moving in with a partner, might be an exciting step in life, but it does create some new financial and tax planning challenges.

“One of the biggest concerns for many life partners has to do with money,” said Tom Hamza, president of the Investors Education Fund, a non-profit organization dedicated to providing people with unbiased financial advice. “Who will spend what? How will you share the bills and how much will you save? You should discuss these questions even before you say ‘I do’ or move in together.”

To get started, sit down with your spouse or partner and discuss your short- and long-term financial and career goals, whether you want children and how many, when you hope to retire, if you’d like to start a business and how you’d protect your family in the event of an emergency or disaster — such as an unexpected death or illness, or loss of a job.

Another major question is whether couples will share their money or keep it separate?

“Actually, there’s no right or wrong answer,” Hamza said. “Some couples share everything, others don’t. Sometimes one person is a saver while the other may be more of a spender.

“It all depends on how you like to handle money and what feels right to you as a couple.

“Make sure you talk about these issues and then work out a common approach you both can accept. If you find it hard to agree, a financial adviser may be able to help.”

It’s also advisable to set up a budget with clear spending limits. Agree on how much each of you can spend — say $100 or $200 — without checking with the other partner. For bigger purchases, talk about then first.

If you do decide to keep your money separate, make sure you plan who will pay which bills. Also, discuss how you will handle you debts, including credit cards and student loans.

Sometimes, one partner has more debt than the other and there may be children from a previous marriage. Couple have to decide how to share these costs.

Getting hitched also has tax implications.

Unlike the United States, where couples can choose to file a joint tax return, each spouse or partner in Canada must file his or her own tax return and clearly indicate their marital status on the first page.

In Canada, common-law partners are defined as two people who cohabit in a conjugal relationship for at least 12 months. They are treated the same as a legally married couple for tax purposes.

While partners must file individual tax returns, it’s a good idea to prepare them together so you can take full advantage of available credits, such as the age, pension income, disability, and tuition and textbook credits. If one partner can’t use the credits, they may be able to transfer the unused portion to the other partner and reduce his or her tax.

By preparing their returns together, couples will be able to determine whether they can split their income and whether they can claim some benefits such as the GST/HST credit, the child tax benefit or the guaranteed income supplement, which are based on the family’s total income.

For couples where one partner is in a higher tax bracket than the other, they may consider splitting their income through a spousal loan to reduce the amount of tax they pay.

There’s another thing to consider: how will partners take care of each other if life changes?

It’s a good idea to discuss what will happen to your money if one or both of you gets sick or dies. You may want to consider buying life or disability insurance if you don’t have any at work, especially if only one of you is working.

And as soon as you marry, any will that you made is no longer valid. If you have children from a previous marriage you’ll want to have a good plan for the future.

“Remember that there’s more than one way to handle your money,” Hamza said. “You need to find what works for you and your life partner.”

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. He can be contated at

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