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It-s-Your-Life

Second marriage issues

It is not unusual that one or both of the parties planning to marry are approaching marriage for the second time. There are pluses and minuses to this new situation.

On the plus side, individuals entering a second marriage tend to be somewhat older and, if not necessarily ‘wiser’ than first-time couples, they have a good idea of their needs and wants, and are often in a more secure financial situation. On the minus side, there can be complications in regards to previous spouses and children that require careful consideration when planning the domestic situation (custody, etc.) and estate plans.

 

Children and Custody

If you or your new spouse has minor children from a previous marriage, it is assumed under law that those children will be properly provided for. Child support requirements are generally based on federal/provincial guidelines relating to the relative income of the parents. When becoming remarried, the income of the new spouse is typically not an issue unless the basic support award had been reduced. When minor children are being introduced to a new home life, it is strongly recommended that legal counsel be retained to ensure that the new arrangement is in their best interests, with the agreement of any other parent, and compliant with legal guidelines.

 

Spousal Support

Unlike child support, spousal support is not subject to specific government guidelines and as such each case needs to be judged on the facts. As a general rule, remarriage is not grounds for a person to reduce his or her spousal payment responsibilities to a former spouse. However, the remarriage of the recipient of the spousal support may result in a reduction, suspension or even elimination in spousal support payments depending on the specific situation.

 

Insurance

If you previously had a spouse, it is often the case that you had life insurance on your life with the former spouse as the beneficiary. This may be the case with both group life insurance through your employer and individual life insurance. If you intend your new spouse to be your insurance beneficiary, you need to review your life insurance policies, both group and individual, to ensure the changes are made. Although there have been some interesting court decisions on this matter, in almost all cases it has been determined that the stated beneficiary will receive the insurance proceeds. That means if no action is taken, your former spouse will probably receive your life insurance benefits if he or she is the named beneficiary.

 

Estate Planning

When becoming remarried, it should be a primary objective to renew your Will. If your former spouse was the beneficiary or part beneficiary of your Will, the granting of a divorce will nullify that. Consequently, you will need to consider how you want your estate to be distributed. Your remarriage may be reason to reconsider how your children will be dealt with in your Will as well. Finally, there may be other assets with your former spouse named as the beneficiary including RRSPs, RRIFs and pensions where you need to think about new beneficiary designations.

 

This publication is intended as a general source of information and should not be considered as estate, tax planning, personal investment or tax advice, nor should it be construed as being specific to an individual’s investment objectives, financial situation or particular needs. We recommend that individuals consult with their professional financial or tax advisor before taking any action based upon the information found in this publication. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. While we endeavour to update this information from time to time as needed, information can change without notice and Dynamic Funds® does not accept any responsibility for any loss or damage that results from any information contained herein.

 

© 2013 1832 Asset Management L.P. – All rights reserved. Reproduction in whole or in part of this content without the written consent of the copyright owner is forbidden. Snapshots™ is a trademark of its owner, used under license.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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About the Author

Jeff Stathopulos, CIM, CFP, Portfolio Manager

Jeff is an advisor and partner with The Navigation Team at Scotia Wealth Management.

He lives in Kelowna with his wife Tanya, their two university bound daughters and their canine kids.

You can contact Jeff by email at [email protected]

Website:  www.yourlifeyourplan.ca

The Navigation Team

Scotia Wealth Management

This column is for information purposes only. It is recommended that individuals consult with their financial advisor before acting on any information contained in this article. The opinions stated are those of the author and not necessarily those of Scotia Capital Inc. or The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member Canadian Investor Protection Fund.



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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