05-07-2025
7 critical estate planning mistakes to avoid if you're in a new relationship, according to a financial planner
Finding love again should be joyful, not a legal nightmare waiting to happen. Whether you're starting over after divorce or the loss of a partner, failing to update your estate planning and financial documents could turn your romantic second act into a family financial disaster.
According to the National Institute on Ageing and RBC Royal Trust, more than 25 per cent of Canadians over the age of 55 lack a will — despite having the most to lose. For those entering new relationships, many also assume their previous estate planning will protect their new partner, but this assumption can be catastrophically wrong.
To help seniors navigate these challenges, Yahoo Canada consulted Janet Gray, an advice-only financial planner with Money Coaches Canada, who revealed the biggest mistakes people make when love finds them again.
Past relationship trauma often prevents the honest financial discussions that estate planning requires. Many seniors don't want to appear overly-concerned with finances — and don't want to focus on money talk with potential partners.
"Not everybody wants to jump in and say, 'Hey, I make this much. How much do you make?'" Gray explained.
She warned that "cautious communication" is important. You can share too much too early, but you also can't build a future without honest discussions.
Gray suggested starting with conversations about financial values and goals before diving into specific numbers. This approach can allow couples to gauge compatibility on money matters without the pressure of sharing exact income figures or net worth.
Many seniors assume they have ample time to organize their documents, but health crises can emerge suddenly and leave them unable to make important decisions.
"One of the biggest mistakes is waiting too long," Gray said. "You kind of procrastinate, procrastinate, procrastinate, and now you've gotten sick. You no longer have the legal capacity to make your will."
Gray strongly advised starting to update official documents before entering a new relationship. She often sees clients with outdated beneficiary designations on RRSPs, life insurance or pension plans that still name their former spouse.
These designations override what's written in your will, so updating them is important.
Blended family estate planning involves complex tax, legal and family issues. Balancing children from previous relationships with a new spouse's needs can overwhelm even the most financially savvy individuals.
"One of the biggest mistakes is waiting too long. You kind of procrastinate, procrastinate, procrastinate, and now you've gotten sick. You no longer have the legal capacity to make your will."Janet Gray, financial planner
"Everyone needs professional help," Gray stated firmly. "This is not something people should try to do on their own."
She recommended consulting an experienced estate lawyer who specializes in blended family planning, rather than relying on well-meaning neighbours or general accountants. For particularly complex situations, you may also need a specialized tax advisor or certified financial planner.
Gray said many people don't know what they want their estate planning to accomplish when entering a new relationship. Without clear objectives, it's impossible to create effective legal documents that serve everyone's needs. "You can't create a plan if you don't know what you're trying to achieve," Gray noted.
Before meeting with professionals, couples should tackle some difficult questions together: Do you want to leave money to your children? How will you provide for your new partner? What happens if one of you needs long-term care?
Before any estate planning discussions, understanding your complete financial picture is essential. Gray said many people focus on obvious assets while missing significant holdings that could change everything.
"Financial awareness means understanding your complete financial picture," she explained. "Do you have a pension? Where are your RRSPs? What does your money look like?"
Gray recommended creating a comprehensive list of all assets and debts, including investments, life insurance, employee benefits and potential inheritance. That way, nothing will slip through the cracks when planning.
Assumptions about family loyalty can lead to devastating consequences. Some seniors assume their new partner will look after their kids, or that stepchildren will respect handshake agreements about inheritance. "We all think, 'If something happens to me, I know they'll look after my kids,'" Gray said.
But this assumption is "too arbitrary." She noted she's seen cases where families "implode" because estate planning was left to chance. Gray strongly recommended prenups or domestic agreements for blended families to establish clear expectations.
Perhaps the most dangerous mistake is failing to understand what happens if you take no action. The legal system has default rules that vary dramatically depending on your relationship status. "There's different defaults for marriage versus common law," Gray warned.
Protect your assets and get it in Gray
She cited cases where common law partners of 30 years received nothing after their partner's death because the house went to the deceased's children. Property doesn't automatically transfer to common-law partners, which makes it even more integral to ensure your estate planning is set up in the exact way you want it to be.
Estate planning for new relationships isn't just about protecting assets — it's about protecting the people you love. While having difficult conversations about money and estate planning isn't romantic, it's essential to preventing family conflicts and ensuring your wishes are honoured. "Protect your assets and get it in writing," Gray advised.
Work with professionals to create clear, legally binding documents that reflect your goals and protect everyone involved. Don't leave your family's future to chance or assumptions about loyalty. "Day one of living together could be your last day," Gray reminded.
