Having an honest talk about finances before getting married

With wedding season approaching and the focus on plans for the “Big Day,” it’s important before tying the knot to set aside time to review where you stand financially as individuals and as a couple, and have an honest discussion about how your finances will impact your marriage.

Whether you are entering into a marriage or a common-law relationship, this is a partnership that will benefit by having an open discussion about your finances prior to getting married or living together. Debt or disagreements about money issues are one of the top reasons for marital and relationship breakups.

Discuss finances with your partner

Here are some important points for you and your partner to discuss:

• Share your credit ratings and credit reports with each other.
• Talk about your past spending and use of credit behavior.
• Discuss whether you should have a joint bank account or separate accounts. There is no one solution here. Many couples keep a joint account for shared expenses, then each person also keeps his or her own separate bank account.
• Tell your partner about the amount of debt you are bringing into the relationship.
• Budgeting for the wedding is a great exercise in prioritizing together and making compromises.

Am I responsible for my partner’s debt?

Although you are not responsible for the debt your partner brings into the marriage or common-law relationship, you are responsible for the debts you incur as a couple.

A party can only be held responsible for repayment of a debt if they have signed a contract, loan agreement or credit card application. If your spouse or partner never signed a contract or requested a credit card, they cannot be held responsible for the debt. In Canada, marriage alone does not make you responsible for your spouse’s debts.

With respect to credit cards, there are two ways in which the second party can be held responsible for repayment of the debt. One is where the individual actually requests a secondary card and signs an agreement saying they accept full responsibility for current and future debt. The other is where the credit card company sends a card out in the second individual’s name with the primary cardholder’s number and the second individual actually signs and uses the card. Use of the card may hold the secondary person responsible for not only their own, but all purchases made on the account by all cardholders.

Definition of a Common-law partner

This applies to a person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. He or she:

a) has been living with you in a conjugal relationship, and this current relationship has lasted at least 12 continuous months; in this definition, 12 continuous months includes any period you were separated for less than 90 days because of  breakdown in the relationship.
b) is the parent of your child by birth or adoption; or
c) has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support.

More about common-law partners from the Government of Canada’s web site.

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Contact a Licensed Insolvency Trustee

If you or your spouse / partner are in debt and need to discuss your options, contact one of Grant Thornton’s Licensed Insolvency Trustees in Canada. We offer a free, confidential meeting – in person or over the phone – to review all debt solutions, including debt consolidation, a consumer proposal, or bankruptcy.

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