By Libby Wildman
We got married! Yes, after nine years together, John and I tied the knot in a loving ceremony at our cottage, attended by 33 guests. Quite a few people have asked us why we would “get married at all.” After all, it wasn’t the first time that either of us has taken vows. The answer: I do not want to be referred to as the “girlfriend of 30 years” in my or John’s obituary. And, more important, John and I highly value our family and community, and we believe that our marriage will strengthen them. “Girlfriend” feels temporary. However, after we made our commitment to each other on the shores of our island in Pointe au Baril, Georgian Bay, the subtle shift in attitude among our family and friends was palpable.
Our good friend Doug Pawes, an elder with the Shawanaga First Nation, performed a traditional ceremony with water, fire, strawberries (a symbol of love and healing) and the four cardinal points. All agreed that the beauty of nature and the power of Spirit created a deeply moving ceremony. It was a time of reflection and love and all things that matter. Our guests sat in their shorts on the ancient rocks, and John and I were near the water facing them, with our hands tied together as a symbol of unity. I cannot think of a more fitting way to commit to each other for life than in the presence and power of Mother Nature and our loved ones.
With this change in our legal status, we also needed to reflect on other important questions. Many newlyweds, for instance, don’t know that their will—drawn and signed prior to marriage—is null and void afterwards, unless it took their upcoming nuptials into consideration. Divorce does not nullify a will. Marriage, however, does. Dying intestate—without a will—guarantees that distribution of your assets will not follow your wishes. If you have children—adults or minors— assets will be divided among them if you die intestate. Getting married offers a good time to review other monetary issues, too. Choose carefully which assets you’ll leave to each other and which you’ll leave to your children upon your death. One never knows how much money will be needed for a surviving spouse’s care and on-going lifestyle.
Registered Retirement Savings Plans and Registered Retirement Income Funds are generally best left to your new spouse; otherwise, they become fully taxable as income if left to your children. Example: If you die with $500,000 left in your RRSP and leave it to your children, it’s taxable as if you made $500,000 in your final year. Why send so much money to the government? The law allows for assets to be passed between spouses on a roll- over basis. This means that capital gains taxes or other types of taxes are deferred until the second death. If you have a cottage, for instance, that was yours prior to the marriage and you choose to leave it to your children rather than your spouse, it will be deemed for tax purposes to have been sold at fair market value at the time of your death. This will trigger capital gains taxes in your estate and could be difficult for your new spouse, if you do not have enough cash to pay that tax. Life insurance beneficiaries, philanthropic wishes, and children who remain dependent should all be reassessed before you walk down the aisle.
These are not easy conversations to have. In my experience, having an advisor who understands the issues—legal, emotional and tax-related—is invaluable. Making clear decisions with the right knowledge and sound guidance can help to keep the peace and love alive in a blended-family marriage. I have been having these conversations for decades and can now relate personally to these issues because I am living them. Contact me if you would like to start a conversation.
Libby Wildman is head of wealth advisory at Toronto-based investment firm Davis-Rea. She is also the founder of The Collective, a community for women entrepreneurs, as well as of Liminal Escapes, which specializes in curated retreats.
