If you are in (or about to enter into) a second marriage, you will need to give some careful thought and attention to your estate planning. The most challenging question you’ll likely face is: How do I make sure that my children from my first marriage inherit from me while making sure my second spouse is well taken care of? If you do not have children but your spouse does, are you OK with all of your estate going to your spouse’s children or should your family, friends or favourite charities get what you’ve worked hard to accumulate? There is rarely an easy answer.
You and your spouse need to sit down and have a frank discussion about what you are trying to accomplish and come to an agreement about how to address any concerns that either of you may have. Here are some key things to consider before looking at possible solutions:
1. What will there be in your estate at your death? If your new spouse outlives you, assets held jointly with your spouse will not be part of your estate and are therefore not controlled by your will. Also not part of your estate are life insurance, RRSPs, RRIFs and similar assets that have a named beneficiary who outlives you.
2. If you have a valid will at your death, whatever is in your estate (generally what you own alone at your death) goes where your will says it goes. Unless your spouse is mentioned in a particular way in your will, marriage to that spouse revokes (cancels) your will.
3. RRSPs, RRIFs, and similar assets are taxed heavily if the named beneficiary is not a spouse. Because of the heavy tax hit, a spouse is often the best beneficiary, but not in all circumstances. There are exceptions (to the heavy tax hit rule) if the beneficiary is a child under 18 or a dependent child or grandchild of any age who has a disability.
4. If there is a separation agreement or court order for spousal or child support, how will those obligations be taken care of?
5. What obligations do you have to each other to provide support? Is there a marriage contract between you?
6. Do you have life insurance that might help balance the various needs you are trying address? Remember that if you have group insurance through your employer, naming a beneficiary must be done through your employer and not in your will. Private insurance usually offers more flexibility.
As you can see, there are many complicated issues that need to be addressed. If you are in a second marriage, make an appointment with one of our lawyers at our Ottawa office today to discuss your estate planning. Together we will come up with a solution that meets your estate planning goals and ensures all of your loved ones are taken care of.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
