My husband’s mother and step-father were each in their third marriage when I met them. My mother- in-law had two children from her second marriage (my husband and his brother), and my father-in-law had two children from each of his first two marriages.
When my father-in-law passed away, his estate avoided probate because his assets were either held jointly with survivorship, or had a designated beneficiary. Namely, everything passed to his wife.
Except for a disagreement about whether he wanted a burial or cremation, the distribution of his estate went pretty smoothly.
Related: 5 ways to prepare your executor before you die
I went to see the lawyer with my mother-in-law when she revised her own will after her husband’s death. The estate would be equally distributed among the six children. However, a couple of years later, she secretly met with the lawyer to change her will, leaving her assets to her own two children.
I will just point out here that I was the executor of all the wills. I didn’t know of the change until I received a copy of the will in the mail.
I confronted her about it.
“I don’t want to be executor. You’re putting me in a bad situation with this new will,” I told her.
“I don’t care,” was her response.
After she passed away, I had a discussion with my husband, his brother and my sister-in-law. We agreed in the end to split the net proceeds of the family home (which my father-in-law had built prior to his first marriage and the children had grown up in) among all the children, outside the will. Fortunately, this was acceptable to all concerned.
Blended families are growing
The number of blended families – and step-children – is growing in Canada. According to the long-form census data from 2011, blended families (where one or both spouses have children from previous relationships) represent about one in eight of couples with children.
Most wills say that assets are all to be given to the spouse, and only on the death of both parents are the children to inherit. In a second (or more) marriage scenario, the will should be set up specifically to split the assets between the children and the spouse.
Protecting your children
It is vitally important that parents of blended families make out a will.
Related: Are DIY wills ever a good idea?
Estate planning becomes more complicated and steps must be taken to ensure that your intentions to protect the children from your prior marriage(s), as well as your new spouse, so that ultimately your estate will be distributed to the intended beneficiaries.
Without careful planning one serious consequence is the potential disinheritance of your children (as was the case in my husband’s family). You want to ensure that at least a portion of your estate passes to your children.
Never assume your kids are going to help each other financially after you pass away.
Special estate planning needs
How do you balance the needs of your current spouse with the protection of your children?
Be aware of survivorship and beneficiary designations.
If you and your current spouse own your home jointly with right of survivorship, for example, your spouse will own the property after you pass away. You can’t leave it to your children in your will.
Assets with a named beneficiary – RRSPs, life insurance policies – pass outside your estate. This named beneficiary gets the proceeds. You could name your spouse as beneficiary of one, and your children the other, for example.
You can protect beneficiaries by setting up trusts.
A spousal trust can be set up to provide income for life for your surviving spouse, or your spouse can have the use of the family home for the rest of his or her life. Then the remaining capital and/or property is passed on to the children.
A family trust can name your children as beneficiaries.
Final thoughts
Make a list of all your assets. Then list how each asset is held (singly, jointly) and which has a beneficiary designation. This list gives a clear picture of which assets are available to leave to your children, and you can cover the distribution in your will.
Related: So you’ve been asked to be an executor. Now what?
Take this list to an experienced estate planning lawyer to talk it through and he or she can produce a tailor-made solution that will distribute your assets in accordance with your wishes.
