Documenting Your Spousal Relationship

You’ve fallen in love and choose to live with your partner (without documentation). That was in your 20s. Since then, your investment portfolio has grown significantly. What should you do?

Or, maybe you have school aged children. What might happen to them if you die?

Or, you’re a retired senior and you’ve lost your spouse to cancer. A few years later, you’re moving-in with your new partner. Do you need some kind of agreement with your new partner?

Whether we like it or not, laws influence spousal relationships. So, each of the situations mentioned above should prompt those involved to refresh their documentation.

Taking things for granted will not help you reach your goals. Whatever they may be.

Managing our finances successfully should include documenting the financial relationship we have with our spouse.

This post will highlight three ways to document your spousal relationship, using a:

• Cohabitation Agreement
• Powers of Attorney
• Will & Estate Plan

Cohabitation Agreements

A cohabitation agreement is a contract usually made between partners in a common law relationship.

The agreement details the relationship between each spouse’s property during the marriage and determines each person’s rights and responsibilities to each other’s property should the relationship end.

Many couples live together but aren’t formally married. Many of these couples also keep separate financial accounts and don’t pool their finances. In these situations, its prudent to document the financial relationship with a cohabitation agreement.

Consider a couple living together in a common law relationship where one spouse owns half of a family business. The intention is to avoid sharing ownership of the business with the common law spouse. But if the marriage breaks down, without adequate documentation, the common law spouse may have a claim on some of the family business anyway. If its fair to compensate the spouse with money instead of shares, this could be planned for too.

Consulting a lawyer who specializes in family law will help you draft a cohabitation agreement that suits your situation and can answer any legal questions you may have.

Powers of Attorney

A power of attorney is a legal document that gives someone (or a trust company) the right to make financial and/or health care decisions for you.

Let’s say you’re an old man losing the capacity to make decisions and take care of yourself. Your wife has died, and you want your adult children to be responsible for your care once you can’t take care of yourself anymore.

At some point, you’ll need your kids to manage your finances prudently and make decisions for your personal care. A power of attorney document can detail these wishes. It can include who and to a certain extent how your finances should be managed including what type of personal care you would like to receive.

Putting a power of attorney document in place BEFORE you lose capacity to make your own decisions is critically important.

A power of attorney document can be drafted by an estates lawyer.

Update your Will & Estate Plan

A will is a legal document that says how you want your estate to be settled once you die. Your estate includes what you own and what you owe, your assets & liabilities. An up-to-date will helps your estate representative follow your wishes. Without a will, it becomes much more difficult (and time consuming) for those who love you to settle your estate.

Let’s say you’ve bought a house for your spouse. You’ve lived in this house for several years. But tragically, you die in a workplace accident. It turns out the income from the trust your grandparent’s setup for you when they died also ends on your own death. The capital from this trust flows to another trust created for the benefit of your brother when you die. You forgot to provide for your surviving spouse by not updating your will & estate plans. So their income from this trust has run out.

This means once you’re gone, the income from your trust fund will no longer flow to your spouse. This means your spouse can no longer afford to keep up their own house. Not only will your spouse lose their home after you die, but they will have to move out during a time when they should be grieving your death instead. If this wasn’t your intention, you should update your will & estate plan.

Updating your will & estate plan can prevent such a situation from happening.

A lawyer specializing in estates can draft a will for you. Your will details your wishes and helps you support the people and causes you care most about after you die. An insurance advisor can also help review your estate plan and ensure money is available to your heirs and the causes you care about after your death.

How our family office can help

Although our family office doesn’t provide legal advice or draft legal documents for you, we can help you in a few other important ways when preparing your estate plan:

• Understanding your goals (we will help you understand what your marriage and estate goals are and then outline what you can do to achieve them).
• We can draft notes and other documents (such as lists of assets, etc) that you can provide to lawyers and other professionals that will make your time with them more efficient (and therefore more cost effective).
• Organize your thoughts. If you’re not used to dealing with lawyers, drafting your will & estate plan can be intimidating. Our family office will create a safe space for you & your spouse to discuss your intentions.
• We can be your sounding board when you have questions about the advice you’ve been given.
• We can suggest ways to achieve your goals that you can subsequently bring up with your other advisors (lawyer, accountant, etc).