Delean: Life partners generally not responsible for each other's debts

Responsibility for a spouse’s debts and dividend reinvestment plans were among the topics raised recently by readers. Here’s what they wanted to know.

Q: My fiance recently bought a condo with his mother for her to live in. Both are responsible for the mortgage. In the event that we divorced, would I have any responsibility for the mortgage if it isn’t paid off?

A: François Bernier, director of tax and estate planning at Sun Life Global Investments in Montreal, said married spouses and common-law partners generally are not responsible for each other’s debts. It’s an individual responsibility. They are jointly responsible, however, for debts contracted for the day-to-day needs of the family.

“If you plan to marry in the near future, you may want to consider being married under the matrimonial regime of separation of property,” he said. “That would potentially protect your private property in case of separation, should your spouse have depleted his own.”

A notary can advise you further on that subject, Bernier said.

Other ways to protect you from a partner’s potential debts include not co-signing any personal loans with him or her and keeping a personal bank account, limiting a joint account to common household expenses.

Q: I’m new at stock-market investing and have seen several of my stocks drop a lot this year. Someone suggested I should enrol in a dividend reinvestment plan. Is that a good idea when stocks are falling?

A: It’s an excellent idea when stocks are down, provided you are confident in the long-term prospects of the companies you hold and the dividend yield is sufficient to permit you to purchase at least one full share of the company’s stock whenever it makes regular dividend payments.

Dividend reinvestment plans (DRIPs) allow you to automatically add to your position in small increments without paying a commission, and you’ll be buying for what may prove to be a bargain price. If you’d rather have the dividends in cash than stock at some point, you can opt out of the plan. Either option usually is a simple online click for do-it-yourself investors.

Q: I was wondering if my husband and I qualify to get the GST (Goods and Services Tax) credit. My personal income is $41,161 and my husband’s is $39,905. We had our income tax prepared over the years by different people and no one mentioned we qualified.

A: It wasn’t mentioned because, unfortunately, you don’t. The thresholds for the federal GST credit in 2022 are net income (from 2021) of $49,166 for a single person and $52,066 for a couple with no children. The thresholds are higher for parents with children under 19. The more you earn, the lower your quarterly payment, if you qualify. When a couple meets the criteria, only one partner will receive the credit.

Q: How long should one keep old tax returns with receipts?

A: The revenue departments expect you to keep tax returns and documents for at least six years from the end of the tax year they relate to. In other words, they expect you to still have the tax records from 2015, plus every subsequent year.

After your 2022 return is processed, you can shred the 2015 documents if you wish. If the tax agencies suspect fraud or misrepresentation, however, they may want records from farther back. The tax documents of a deceased person can be disposed of by his or her legal representative after issuance of a clearance certificate.

The Montreal Gazette invites reader questions on tax, investment and personal finance matters. If you have a query, please send it by email to Paul Delean at gazpersonalfinance@hotmail.com

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