Jill’s sister Anna went through a difficult divorce. Everything has been settled with her ex-husband and she has been in a new relationship for the past two years. Tom, her new beau, has two children. They are planning to move together come Summer time but Anna is nervous about moving in with a new spouse, particularly with one who has two dependent children to take care of. In the end, all she wants is for her new family to be happy!
Stepfamilies now make up approximately 13% of Canadian families with children. Almost half of those are blended families with children from the new and former relationships, or from which one partner brings children from a previous relationship. Blending might result in some financial challenges, particularly when one spouse has children and the other does not. Here are a few tips to insure that financial issues do not get in the way of your happy blended family:
• Be proactive. Have an open and frank discussion about your financial position before moving in together. Disclose your assets, your debts and talk about your budget, your lifestyle and your financial habits, goals and preferences;
• Meet with a lawyer to discuss whether or not a cohabitation or marriage contract would be necessary in your case to protect your existing assets or to determine in advance what you will or will not share financially during your relationship and in the event of a separation;
• The spouses should be clear about what they are prepared to contribute, if anything, to assist with raising the other spouse’s children. If your understanding is that you will never be called upon to support your spouse’s children, during and/or after the relationship, put that understanding in writing (normally in a cohabitation agreement or marriage contract);
• Consult an accountant to discuss how you may be able to organize your financial affairs to minimize the tax consequences of living together. For instance, after 12 continuous months of living together, you are required by the Canada Revenue Agency to change your marital status to common law partner. One’s ability to claim certain tax credits and benefits may be affected by that change.
Blended families can be very successful both for the new couple and for the children who form this new family, particularly when the spouses take the time to plan ahead and discuss in an open and honest manner about what each of them expects from the relationship. Life is giving you a second chance, so start on the right foot and plan!
