If you are part of a blended family, your estate planning requires careful thought and consideration. Estate planning for blended families can be more complex because you and your spouse may have different priorities and obligations in the event of the death of one of you. To avoid conflict between surviving family members, it is both important to understand your legal obligations and to document your wishes in valid, legal documents to ensure that your plan is clear and can be upheld.
Below you will find some things to consider when engaging in estate planning as part of a blended family:
- Obtain advice from a lawyer regarding your obligations to support dependants in the event of your death. Do you have children or a former spouse who are entitled to support? Are there any agreements in place regarding security for support on death (this is very common in Separation Agreements, where periodic child and/or spousal support is payable)? How does your obligation to support a first family coincide with your obligations to a second family? Do you have biological or adopted children from a second relationship or do you have a financial obligation towards step-children? This information should be incorporated into your estate plan to avoid costly litigation against your estate.
- Consider what legal documents you should have in place to prevent claims against your estate. For example, you should consider the need for a Separation Agreement with your former spouse (for common law and married spouses), as well as a Marriage Contract or Cohabitation Agreement with your new partner. A Marriage Contract or Cohabitation Agreement will apply in the event of death, as well as separation, however, it is important to understand that you may still have an obligation to make adequate provision for a dependant spouse on death, notwithstanding the existence of Marriage Contract/Cohabitation Agreement. Of course, you should prepare a Will to govern the administration of your estate. It is important to ensure that contractual obligations you have on death as set out in a domestic contract are reflected in your will and estate plan.
- Speak to your lawyer about the use of Trusts, including Spousal Trusts, or Mutual Wills Agreements. Mutual Wills are any two (or more) wills which are mutually binding. This means that following the death of the first person, the manner in which the survivor can dispose of property or make changes to an estate plan are limited by the agreement made with the deceased. For example, in blended families, spouses who want to ensure their first family benefits from his or her estate may prepare Mutual Wills. A Spousal Trust allows a spouse to benefit from the income and capital of the trust during their lifetime put provides for a giftover of the balance on death, often to children from a first marriage.
- Review your life insurance and pension plan benefits to determine how these will be distributed on your death and whether any changes to beneficiary designations can or should be made to meet your obligations.
- Finally, have conversations with your beneficiaries about your intentions. Being open about your intentions can help to avoid surprises and hurt feelings on death.
This blog post was written by Partner Kate Wright, Practice Lead of the Wills and Estates team and member of the Family Law, and Estate Litigation teams. Kate can be reached at 613-369-0383 or at kate.wright@mannlawyers.com.