Weddings are a big business. The wedding industry in Canada is estimated at about $4 billion. Some 150,000 wedding ceremonies are conducted each year in the country, about 45 per cent of them in the summer months of June, July and August.
Getting married is an exciting step in life, but it does create some new financial and tax planning challenges.
Money is one of the biggest concerns that life partners have, and the issue can start even before the big day.
According to Investors Group, the average cost of a wedding today is between $20,000 and $30,000.
“Planning your nuptials increasingly requires the same foresight and prudence as saving for post-secondary education or the purchase of a new home,” says Christine Van Cauwenberghe, director of tax and estate planning with Investors Group. “As the wedding date draws nearer, couples planning for their big day will need to answer some questions: what are my financing options, what does a realistic savings plan look like and what types of investments are appropriate for the plan?”
It’s important that couples discuss and establish a realistic household budget based on income and determine who much they want to spend on the wedding, mortgage, future savings and other bills.
It’s also important to understand marital assets.
Generally, all assets acquired during a marriage are shareable between both spouses while the assets that each spouse brings into a marriage are not. However, there are some notable exceptions depending on the jurisdiction in which you live. “It’s often difficult to approach the topic of pre-nuptial agreements or marriage contracts, but having this established can make both parties more comfortable and lead to a happier marriage,” Van Cauwenberghe says.
Weddings often can result in a financial nest-egg for the couple, and one of their first joint decisions might be what to do with it – pay off student debt or a loan to finance the wedding, use it toward a down payment for a home, or put it into a Retirement Savings Plan (RRSP) or a Tax Free Savings Account.
Getting hitched also has some tax implications.
Unlike the United States where couples can choose to file a joint tax return, in Canada each spouse must file their own return.
Even though couples file separate returns, it’s often be a good idea to prepare them together so they can take advantage of age, pension income, disability, and tuition and text book credits. If one partner can’t use the credits, they may be able to transfer their unused portion to the other partner to reduce his or her tax.
By preparing returns together, couples will be able to determine whether they can split their income and whether they can claim some benefits such as the GST/HST credit, the Child Tax Benefit, of the Guaranteed Income Supplement, which are based on the family’s total income.
In all provinces except Quebec, if you had a will before getting married it becomes null and void when you tie the knot unless it was specifically drafted in contemplation of the marriage.
It’s also important to know that beneficiary designations are not impacted by a marriage. So if you want your new spouse to receive insurance policies or RRSPs directly then you must change the beneficiary designations for them.
“You and your spouse need to work together to accomplish your financial goals,” Van Cauwenberghe suggests. “Given the complexities involved, it is imperative that you seek professional advice to ensure that your estate plan and financial plan are in order. Candid discussion and thoughtful planning in advance of your wedding will help ensure that you start married life off on the right financial foot.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
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