Annette Klein and Stephanie Fraser have made smart moves when it comes to their finances. The married Vancouver parents have designated each other as beneficiaries on their registered retirement savings plans (RRSPs) and drawn up wills. And while same-sex partners have all the same rights as other couples, there are distinctions when it comes to where Klein and Fraser choose to do their banking.
“If anything, they have to have an organizational culture that commands respect for all differences,” Fraser says. “We bank at Vancity, which is very progressive. We’ve never had any issues or any difficulty. It’s obvious they’ve instilled a culture of respect.”
The 2011 Census showed that the number of same-sex married couples nearly tripled between 2006 and 2011, reflecting the first five-year period for which same-sex marriage has been legal across Canada.
The Census counted 64,575 same-sex couple families, up 42 per cent from 2006. Of these couples, 21,015 were same-sex married couples and 43,560 were same-sex, common-law couples.
Whether married or common-law, LGBT or straight, couples can face challenges when it comes to dealing with money and matters of the heart.
“Financial planning may be more complex if a gay couple has family members who don’t approve of the union, but that would also be true for a heterosexual couple with disapproving family,” says Perler Financial Group certified financial planner Jennifer Maier. “Having disapproving or uncomfortable family members is not exclusive to those in the LGBT category, but it does seem more prevalent in my experience. Money issues certainly do seem to create friction. Our society seems wired and trained to react strongly to money.
“Is financial planning more complex for LGBT people? Well, I believe you could insert any group — age, race, religion — and get a similar answer: we are all unique,” Maier says.
Regardless of their orientation, TD Waterhouse certified financial planner Rodney McPherson says people might not be aware of all the different ways to reap financial benefits as a couple.
“From basic financial planning to will preparation, there are things any household should be looking at,” McPherson says.
Marriage, a significant change in your relationship such as moving in together, or making a major joint purchase like buying a car or home are all good times to review your finances and plans.
McPherson shares these reminders for all couples:
- Name a beneficiary on your pension and registered plans to ensure a smooth transition of assets. In the case of death, RRSPs and RRIF assets can be rolled over on a tax-deferred basis to the surviving partner.
- Remember that common-law couples must file a joint tax return. (As long as two people have lived together in a conjugal relationship for a certain period of time, which varies across Canada, they’re considered a couple under the federal Income Tax Act.) Advantages include the ability to claim a tax credit for a financially dependent partner and to transfer costs, such as that of tuition, to a partner. Partners may also combine credits on certain payments, such as charitable donations, to maximize tax credits.
- Consider joint registration of assets, including bank accounts, real estate and vehicles. Doing so enables the surviving partner to assume immediate ownership in the event of the other’s death.
- Look into income splitting, such as contributing to a spousal RRSP and splitting pension income.
- Consider life, disability and critical illness insurance to ensure adequate coverage for the household if necessary.
- Designate power of attorney. Without this, people might not automatically have the legal authority to manage their partner’s financial affairs or make health-care decisions in the event of incapacity.