June is Pride month in Toronto and for the second year in a row celebrations are being held virtually around the city. 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, Transgender, Queer) community is well on its way towards equality, but there are still some differences that need to be considered when structuring financial plans.
Changes in employment benefits – Many large companies in Canada have implemented policies that prohibit discrimination based on sexual orientation. In fact, 96% of Fortune 500 companies have instituted such policies. However, 34% of Fortune 500 companies still do not offer domestic partner health insurance benefits to their employees.
Estate Planning – Intestacy rules (dying without a will) 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.
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 weekend,
Tracey
Source: Advisor.ca by staff posted 06-09-2014, BMO report 2014, Statistics Canada website, Human Rights Campaign website, Catalyst website, MT 07 2014, MT 06-21-17
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