Putting your career on hold for the well-being of your family is commendable. Anticipating the economic consequences is judicious. We all want to protect our children, those beings so dear to our hearts as parents. But protecting them well also means protecting yourself. Here's how a de facto union contract or a will can help.
Having a child is a family project. But very often, one of the parents will put his or her career on hold to stay at home and look after the toddler. This decision has many advantages on a day-to-day basis, but in the event of separation, it also has economic consequences. After all, you can't bury your head in the sand: all those years you've been out of the workforce have made you poorer.
Marriage and civil unions
If the couple is married or in a civil union, each spouse benefits from legal protections. In 1989, the family patrimony was created to promote economic equality between spouses. In the event of separation, the value of the assets making up this patrimony will be shared,[1] regardless of who contributed to acquiring them, or the right of ownership. The family residence also benefits from special treatment, and a parent who has custody of the children may be granted use of it with the minor children, even if he or she does not own it.
Nevertheless, a couple getting married and planning to have children should discuss with their notary whether other protections should be included in a marriage contract or otherwise.
De facto union
For common-law couples, it's a completely different story. There is no legal protection for them in the event of separation, and very little in the event of death. Some 36% of couples in Quebec are in a de facto union, so many parents find themselves at a loss in these situations. For example, in the event of death, the de facto spouse is not considered an heir, even though he or she may qualify for Quebec Retirement as the surviving spouse for the widow(er)'s pension. If the couple separates, even after 10 years of living together, there is no division of annuities, pension funds or other assets, unless they are co-owners.
Because they mistakenly believe they have the same rights as married couples, many de facto spouses neglect to protect themselves adequately. For example, a parent who has been out of work for 10 years and has custody of his or her children will receive alimony to help feed, clothe and provide for them, but it won't help pay the rent! Under these conditions, the children may have to squeeze into a small apartment because the parent can't afford a larger place.
A consultation with a notary will enable both spouses to make an informed decision. The signing of a cohabitation agreement, between co-owners or others, can be very useful. For example, a cohabitation agreement could stipulate that, in the event of separation, the children will remain in the family home with the custodial parent, regardless of ownership or financial responsibilities.
Incapacity
Why should a parent draw up a mandate of protection? In addition to choosing the person who will represent him or her, a parent can include clauses that will allow the mandatary to use his or her assets for the benefit of his or her children, in order to maintain the standard of living they have known. Such clauses give the mandatary the necessary latitude and avoid having to consider whether paying for a young person's university education, for example, is to the advantage of the incapacitated parent for whom he or she is responsible. The parent can also appoint a guardian if the child is left without a parent able to represent him or her.
Instructions can also be given concerning the children, their education, etc. A parent who believes that travel is instructive and formative for young people should indicate this in the mandate, and provide instructions to this effect to the mandatary and tutor, if applicable.
The death
Losing a parent is infinitely sad, and if, on top of that, he or she didn't make a will, it can leave the family in a difficult situation and create tensions. Without a will, the legal spouse inherits a third of the estate, while the de facto spouse receives nothing. The deceased's estate is therefore mainly or exclusively in the hands of the children. Most of it will remain frozen until they come of age, when they will take possession of their inheritance.
But how will the surviving parent, if he or she has been at home for 10 years, manage to meet daily expenses? He has no right to live off the inheritance of his minor children. He'll manage, that's for sure. But why put him in such a situation, when good testamentary planning could have avoided this pitfall?
A will can also specify how the inheritance of a child who is a minor, drug addict, disabled, etc., is to be managed. Who will look after it for them? At what age will they be able to manage it themselves? For example, if you're promoting university education, is it a good idea to give him his inheritance at 18? These are just some of the questions you need to ask yourself before you pass away.
Making a will is a gift to your family, provided it's well done. Consult your notary, who is an expert in estate planning.
Protecting your children can be done in a variety of ways, and can evolve over time. A good tip: consult your notary to take stock of your situation. Your children will thank you for it!
[1 ] Family residences, furniture used by the family, vehicle(s) used by the family, RRSPs and other pension plans, QPP.
