The Cohabitation Conundrum

Moving in together can bring both joy and complications.

A few months ago, I moved in with my best friend — the man who is both my business partner and soulmate. I’m in my mid 50s, but I feel like a kid again. Aft er past relationships, John and I have both learned to trust love and live in harmony. We know that we’re meant to spend the rest of our lives together. What could be more beautiful? And yet, it’s not always simple.

We’re not alone: According to Statistics Canada, 26 percent of committed couples were in at least their second long-term relationship — and that number is on the rise. But one CIBC poll found that only one-third of couples about to get married or enter a common-law relationship have actually had a serious conversation about money. These discussions need to happen.

John and I hope to live long, healthy lives together, but we also understand the importance of making sure that whoever is left behind in old age has the means to live a life without concerns about money. Th e devil, of course, is in the details.

We both have children to consider, too; he has two and I have three. We want to leave a financial legacy for them once we’re gone, but like many other parents in this situation, I’m now faced with a dilemma: How can I make sure my children are taken care of, while also being fair to John?

It’s a complicated, emotional situation to navigate. I can’t shake the sense — and, as a financial consultant, I know that many of my clients feel the same way — that there is a difference between my biological children and my stepchildren. Aft er a difficult divorce, my strongest urge is to protect what’s mine. Having already been financially cut in half once, I need to know that my children will benefit from my legacy, my wealth and the freedom and respect that goes along with it. That comes at a price for John, as I won’t be leaving everything to him.

I know John feels the same way, too. Take, for example, our cottage. It’s a place where we both truly feel at peace. But, on paper, it belongs to John. I understand his perspective (he lost a former home through a breakup), but only up to a point — after all, isn’t death different from divorce? If John dies before me, don’t I have the right to continue spending time at this place that feeds our souls? The trick to estate planning is developing a plan together that respects both of our wishes. It’s difficult, even as someone with years of experience in the business. Dreaming up a result you’re both happy with requires compromise and an open heart and mind. Here are three things to consider.

Account for multiple scenarios. If one thing is certain, it’s that life is unpredictable. A financial consultant can help you prepare for a variety of situations: What happens if one of you dies prematurely? Will you be able to manage any potential long-term illnesses? Do you have enough saved if both of you live well into your 90s? These are all important considerations, and you should have an action plan ready. And don’t forget to be flexible: What makes sense now may not make sense in five years, so these plans should be revisited and adjusted as needed.

Consider tax laws. Sometimes, the most logical route isn’t hard to find — it’s already written down for us. For example, in Canada, if you leave your registered retirement savings plan (RRSP) to your children, they are fully taxable as income on your final tax return. It’s a no-brainer, then, to make your spouse or partner the beneficiary of all RRSPs and pensions.

Remember that life insurance is flexible. In fact, it’s a separate, succinct asset that also happens to be tax-free. You can have multiple beneficiaries — meaning it’s an easy way to make sure both your children and partner are taken care of — and it’s easily changed, too, so if your partner passes away before you do, you can adjust it so that everything is left to your kids. Estate planning in a blended family isn’t easy. John and I had many difficult conversations about this —often, I was left frustrated, torn and in tears. Money, legacy and its hold on us, really is that powerful. At its core, these issues are about respect and recognizing the importance of relationships. While John and I aren’t married, I want to be recognized as his life and love partner, not merely a girlfriend. I want the same for him.

So together, we made decisions — like leaving each other life insurance money and putting our new home in joint tenancy — that helped us declare our commitment to each other on paper, while still looking after our children. Now, we both feel heard and cared for — and not just because we’re both leaving assets for each other. We’ve shown that we have the ability to sit and give each other the space to fully express what we feel, think and want. And that’s the most valuable thing of all.

Libby Wildman is a Senior Partner at the Toronto-based investment firm Davis Rea and the founder of Liminal Escapes creative curated retreats. She can be reached at