This is World Pride week and Toronto is playing host to
thousands of same-sex couples celebrating their march towards equality. The number of same-sex couples has doubled in
Canada in the last ten years, making up almost 1% of all couples.
The LGBTQ (Lesbian, Gay, Bi-Sexual, Trans-Sexual, Queer)
community is well on its way towards equality, but there are still some differences
that need to be considered when structuring financial plans.
A report by BMO cites several areas LGBTQ couples need to
consider:
Changes in employment benefits: Many large companies in Canada have
implemented policies that prohibit discrimination on the basis of sexual
orientation. In fact, 88% of Fortune 500
companies have instituted such policies.
However, 38% of Fortune 500 companies don’t offer domestic partner
health insurance benefits to their employees.
Estate Planning - Wills:
Intestacy rules in several provinces; including Ontario; do not provide
for same-sex or common-law spouses.
Instead, the assets will be passed on to the closest living relative of
the deceased; parents, children, and siblings.
This may leave the common-law spouse fighting for a share of the assets
or financial support, especially if the deceased’s family did not approve of
the same-sex relationship. Making sure
you have a properly worded will is essential to ensure financial protection to
the surviving common-law or same-sex spouse.
Powers of Attorney (POA):
When you draft or update your existing will be sure to include POAs to
protect both spouses. This will allow
your trusted partner to make health care and financial decisions on your behalf
if you are unable to do so.
Life Insurance:
Insurance is an important part of any financial or estate plan. Life insurance proceeds pass outside of the
will, therefore by naming your common-law or same-sex spouse as beneficiary you
will ensure they will be provided for at the time of need.
Progress by Canadian Government
Changes in Old Age Security and the Canada Pension
Plan: It was in 2000 when the benefits
and obligations of OAS and CPP were extended to same-sex and common-law
couples. These changes included the
availability of survivor benefits for common-law partners of deceased
individuals. As well as the ability to
share CPP benefits proportionally to the time spent together. These programs are important components of
retirement planning.
Tax Changes: The
ability to save and defer tax as part of an overall financial plan and/or part
of an estate plan became available in 2001, with equality being granted to all
Canadians for tax purposes. The use of
income-splitting strategies such as the Spousal RRSP, prescribed-rate loans,
pension income splitting and the transfer of certain tax credits between
spouses; are all excellent tax saving strategies available to all couples.
As always, if you have any questions or want more
information please don’t hesitate to contact me.
Have a great Long Weekend!
Happy Canada Day,
Tracey
Source: Advisor.ca by
staff posted 06-09-2014
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