Building a (financial) life together: Financial planning for the married woman

21 Jun Building a (financial) life together: Financial planning for the married woman

In about a third of Canadian households, women and men are earning roughly the same amount. And in 17% of families, women are actually earning more than their husbands.[1]

With women contributing a greater percentage to the family’s overall income, it’s important for married women to be active participants in the financial planning.

If you haven’t done this before, it’s a good idea to think strategically. Start by keeping some of these ideas in mind. Then work with your spouse to make decisions to benefit your entire family.

Financial Planning

A married couple is not simply two independent adults. They are more like a team protecting its home turf. When it comes to financial planning, the goal is to arrange your financial affairs so that you are paying as little as possible in taxes. This means:

• Consider income splitting. If one spouse is earning significantly less than the other, it’s possible to attribute some of that income to the lower-income earning spouse in order to save money. In addition, if the higher-income spouse pays as many of the family expenses as possible, the lower-income spouse can strategically invest the income saved – which means the income can be taxed at a lower tax bracket.
• Use your tax credits. Ensure tax credits are assigned to the spouse who will receive the most benefit from it. For example, the higher-income spouse should make the charitable contributions to reap greater tax savings, while the lower-income spouse should claim the medical expenses.

Estate Planning

Every adult needs a properly arranged will, whether you have significant assets or not. A married woman may want to leave everything to her spouse, or she may have other plans. Either way, the will should be carefully considered. Some factors include:

• If you already have children from a previous relationship, or if you have a complicated financial situation, it may be worthwhile arranging a trust to protect your assets. Ask your advisor if you are unsure.
• There are a number of reasons to purchase a life insurance policy, but each reason generally falls into one of the following three categories:
  • To create an estate. If you don’t have enough money saved to care for your dependents, insurance can cover your debts and provide a nest egg for them.
  • To preserve an estate. If you have assets with an unrealized capital gain that you want to pass to the next generation, insurance can cover the capital gains and save the assets.
  • To equalize an estate. If you have assets that can’t be evenly divided among your heirs (i.e., a vacation home going to your oldest child), insurance can provide an equivalent amount for the other children.

Disability Planning

Getting married may mean forever, but you can’t assume your spouse will want to be your primary caretaker if you get hurt or sick. An illness or injury can be a drain on family resources in terms of both time and money, and it’s smart to make your spouse’s job as easy as possible by making sure you have the resources to weather the storm. Take steps to secure:

• Powers of attorney: Make arrangements for your spouse or another trusted person to be designated to act on your behalf. If you don’t have powers of attorney, your spouse will have to go to court to arrange it. Plus, if your wishes are documented, it will be easier for your spouse to follow them.
• Disability insurance: Make sure the policy provides enough funding to take care of your family’s needs. Group insurance provided by your employer may not be enough, especially if you are the main breadwinner or if your financial situation has changed significantly since you got married.
• Critical illness insurance: This type of policy covers other expenses that disability insurance won’t cover, such as home renovations or a caregiver. It also arrives in one lump sum, when you and your family need it most.

To learn more about planning your estate, contact us.

[1] https://www.cbc.ca/news/politics/2016-census-income-couples-1.4287483

Joel Rose

With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.