“This is a cry for help,” writes us bluntly Anne-Marie *, a civil servant from Quebec, in a relationship for 20 years with Grégoire, self-employed and owner of a small business without an employee.
Posted on December 6, 2020 at 7:00 a.m.
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Anne-Marie is 55 and plans to retire at 60. Grégoire has 59 and would like to stop working at 60 as well. However, he does not have a pension plan, not enough RRSPs, has not really contributed to the Régie des rentes du Québec and his business is accumulating debts.
For the past seven months, Anne-Marie has assumed all current expenses. Grégoire lost his contracts due to the pandemic, and the Canadian Emergency Benefit (CEP) was used to pay his taxes for 2019. For many years, Anne-Marie has paid 66% of their expenses and he, 33%.
“We have always kept our personal finances separate because we don’t agree on this subject,” she explains. He does not want to discuss with our financial planner, nor with me, his precarious financial situation, and I find that heavy… ”
In addition to supporting her spouse, Anne-Marie has always been thrifty by maximizing her RRSPs, even if she contributes to her government pension plan. She also bought half of the duplex that Grégoire had inherited, in which they decided to take up residence.
“I worry about his financial future. I know I should say “our” financial future, but we’re more roommates than a couple. ”
Figures
Anne Marie
Salary: $ 118,500
REER: $ 294 000
TOTAL: $ 49,000
Retirement plan estimated at age 60: $ 55,000 per year
Anne-Marie and Grégoire (50/50)
Mortgage-free duplex, market value of $ 540,000
Gregory
Business debt: $ 15,000
Salary: $ 21,000
REER: $ 90 000
TOTAL: $ 0
Pension plan: $ 0
Analysis of the situation
“The law is made to protect” theoretically “the member of the couple who sacrificed his career to raise children, which is not the case of our couple,” launches Michel Madore, accountant and financial services advisor, bluntly. to whom we submitted the reader’s questions.
“We feel that she is tired of the situation and that her partner is not making any efforts to improve it,” he continues. On the other hand, she let things go for too long. Assuming 66% of the expenses for that many years, I wouldn’t say she was abused, but almost. ”
PHOTO MARCO CAMPANOZZI, THE PRESS
Michel Madore, accountant and financial services advisor
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Anne-Marie must ask several questions, according to the specialist. First of all, is she planning to leave him? Does she still want to assume the 66% until they leave? Because in the event of separation, she will undoubtedly be the loser.
Few couples know it, but it’s not just married people who have to separate their retirement plans after a breakup. Common-law spouses may have to pay the other up to 50% of their pension plan and their Régie des rentes du Québec plan. The longer Anne-Marie waits, the more the sum will be important, the more she will be disadvantaged for her future.
As for Grégoire, he will not pay him anything at all, since he has no pension plan or contributions to the QPP.
If Anne-Marie and Grégoire had married, it would have been necessary to add the separation of RRSPs and TFSAs.
“It is not a rare case, affirms Michel Madore. There are a lot of couples who never talk about finances and one day wake up to find that the other hasn’t acted the way they thought they would. It is always unhealthy to live as a couple without being able to talk about money and without having a joint life contract. ”
First option
Grégoire confines himself to remaining silent? So everyone in their home and each their finances, suggests the specialist.
If Anne-Marie wants to secure her retirement future, she must end the de facto spouse situation without delay. To do this, the couple must absolutely be physically separated.
Anne-Marie could, for example, go and live in the other apartment in the duplex. “It could not be done until next July, following the eviction of the tenant! », Specifies Michel Madore.
The other possibility is that one of the two keeps the duplex. As Gregory had inherited it, there is a good chance that he wants to keep it. “He must then buy back his spouse’s share at today’s market value,” explains the advisor. He’s going to have to take out a mortgage. If he cannot, the couple will have to sell the building and share the profit. And if Monsieur doesn’t want, Madame will have to take legal recourse. ”
The day they are no longer de facto spouses, Anne-Marie will have to pay Grégoire part of her pension plan that she accumulated during the 20 years of cohabitation and part of the Régie des rentes du Québec. For her part, Grégoire will not pay her anything and will keep her RRSPs like her.
“The day they are separated, the sharing stops. If she continues to work for five years, it will be for her own benefit, instead of working half of it for the benefit of a future ex-spouse. ”
Second option
If Anne-Marie wishes to continue living under the same roof as Grégoire or even if she believes that she will not grow old by his side, she must as soon as possible make an appointment with a notary to make a contract of common life.
“It is by making this contract that she will be able to eliminate this sword of Damocles above her head,” says Michel Madore. She will have the opportunity to see if the spouse expects to reap everything. And if this is not the case, the contract will establish that he agrees not to touch his pension fund. ”
“She will also know if what he is looking for is to continue living in some way on his hook, if the contract stipulates that she continues to bear 66% of the expenses. ”
With a contract of common life, Anne-Marie will be able to live with Grégoire until death separates them, but with a calm head.
* Although the case highlighted in this section is real, the first names used are fictitious.
Are you planning a project that requires wise use of your money? Do you have financial problems? Submit your case to the Train de vie team.
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