Special estate planning needs for blended families
Blended families, created by the marriage or common-law relationship of partners with children from a previous relationship, are becoming increasingly common. Being a member of a blended family can create added complexities to estate planning situations. If you want to ensure that your legacy is passed on according to your wishes there are many issues you need to consider.
Have you updated your will?
In most provinces and territories, a new marriage could render all previous wills and formal amendments to your will null and void, unless written in contemplation of that marriage. A new common-law partnership or civil union does not typically have this effect, but the rules vary between jurisdictions. When entering a new relationship, it is important to redo your will and avoid the two common misconceptions that can prevent your beneficiaries from receiving the inheritance you planned for.
Many people believe they can:
- Leave their entire estate to their children. Not necessarily - if you do that, your new spouse or partner could be able to make a claim on your estate that may consume a large portion of your estate’s assets.
- Leave everything to their spouse and when they die, the total estate will pass directly to the children. Not necessarily:
- If all your non-registered assets are jointly owned, your spouse will inherit them by right of survivorship, and is not required to leave any of the remainder to your children from your previous relationship(s).
- If your surviving spouse dies without a will, his or her estate will be distributed according to the intestacy rules in his or her province or territory, which may exclude any of your children that your spouse did not adopt.
- If your surviving spouse remarries, his or her estate could be left to his or her new spouse and/or family.
- If your surviving spouse indicates in their will that all assets go to "the children", it would exclude any of your children that your spouse did not adopt.
One way to ensure your children from a previous relationship receive the inheritance you desire is to bequeath a set amount to your children and leave sufficient funds to your surviving spouse to satisfy any family property or dependant’s relief claims your spouse might make. Consider using life insurance to equalize the estate.
Do you have the right life insurance?
By carefully selecting the right type of life insurance and assigning beneficiaries, you can use life insurance to help meet the needs of your children and your spouse. That way, you'll have peace of mind knowing your legacy will be passed on exactly as you wish.
Other blended family estate planning options include testamentary spousal trusts, which may or may not incorporate a life insurance component.
Having a blended family creates unique estate planning challenges. Setup a meeting with your Investors Group Consultant to discuss your options to ensure you leave the legacy you desire.
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This article, written and published by Investors Group Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.
Insurance products and services offered through I.G. Insurance Services Inc. (in Quebec, a financial services firm). Insurance license sponsored by The Great-West Life Assurance Company (outside of Quebec).
© Copyright 2007, Investors Group. All rights reserved. Do not reproduce without the express written consent of Investors Group.
