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Friday, July 16, 2010

What do people in a second marriage have to consider when making a Will?


Because I get so many questions about second marriages, and because it's so tricky to get estate planning right for individuals in this situation, I thought I'd talk a bit about some of the issues that specifically apply to people in second marriages. I'm not going to cover issues that apply to ALL married individuals, but only those that crop up with second or subsequent marriages.

Firstly, in some provinces, getting married automatically revokes an existing Will. If you made a Will after your divorce to look after your children, that Will was revoked when you re-married.

You'll realize when you start discussing your estate planning that you're going to have to carry out a balancing act between the various people in your life. You owe an obligation of financial support to certain people, including your spouse (married spouses in all provinces, common law spouses only in certain provinces), your minor children, and your children who are adults but who cannot earn a living due to a disability. This gets tricky for people in subsequent marriages because they often have two sets of children - one from each marriage.

I talked a bit more about that balancing act in a post here.

There are some other issues as well. For example, have you adopted your step-children? Typically people going into a second marriage only adopt their step-children if the children are quite young, but that varies. Understand that for the purposes of estate planning, non-adopted step-children have quite a different legal status than adopted step-children. If you don't make a Will at all, or the Will you have made is found to be invalid, this will make a huge difference to their rights.

If you do not make a valid Will, and your estate is to be divided among your spouse and your children, the word "children" here only includes blood or adopted children, and not step-children.

Also consider the beneficiary designations you've made on your life insurance policies and RRSPs. If you bought those items during your previous marriage, they probably designate your ex-spouse as the beneficiary. Perhaps that's what you still want, or what you are obligated to do as a result of your divorce settlement. In that case you don't have to change anything.

Most people, however, want to update their beneficiary designations to name their current spouse or perhaps the children. Do not assume that your divorce decree or your separation agreement changes those designations, because they do not. In some cases (a minority) the divorce or separation paperwork will specifically refer to a certain policy or account and talk about how it's to be dealt with; most do not. The generic wording of releasing all claims against the other's estate does NOT change beneficiary designations. You'll have to do that yourself if you want to change it.

Guardianship of minor children can also be an issue. You may have two sets of minor children who will likely have two different guardians. When you pass away, the children's other biological parent automatically has a right to custody, so you have to word any guardianship appointments for the children of your first marriage properly. I talked more about this in a post here.

For some people, leaving money in trust for the children of a previous marriage is an issue because they don't want their ex-spouse to have access to that money.

Finally, think about how the Dower Act might affect you. Most provinces in Canada have abolished the Dower Act but it's still in effect (for now, at least) in Alberta. This law gives a married (but not common law) spouse a right to live in the matrimonial home until he or she dies, moves out permanently or signs away that right. This can cause complications for someone with a current spouse who is trying to pass on property to children of a previous marriage.

If you are in, or soon to be in, a second (or subsequent) marriage, I strongly urge you to talk to an experienced estate planning lawyer to have an appropriate Will made. It's not a simple document but if properly done it will definitely save money and headaches for the people left behind after you pass away.

10 comments:

  1. I was married & am divorced 7 years. I came out as a gay man. I have a will that my ex is executor of & I leave 60% to her & my daughter age 28. She is finished university. I plan to formalize my relationship with my new partner in Costa Rica. They do not have gay marriage. We want to document our conjugal relationship there so he can come to Canada. In my will he gets 40%. Long term we will be married in Canada. Is this all O.K. or do I need to re-visit my will?

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  2. as of today I am reading "new wills and succession act, SA 2010, c.w-12.2 A summary of Changes revised October 1 , 2015. . the law that a will is revoked on marriage or signing an adult interdependent partnership agreement is repealed. marriage will not revoke will after WSA comes into force. this is intended to apply regardless of when the will was made.

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    Replies
    1. That's correct. You'll notice that my post was made before the new Act was enacted. Things change.

      Lynne

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  3. i made a will when i was widowed ,for my kids and after a year later i remarried .is that will still vallid if something happens to me .?My lawer said my kids will get their property of there late father .but iam confused

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    Replies
    1. Whether your will is still valid depends on which province you live in. Most provinces no longer revoke wills on marriage, but some do. Don't leave it up to chance.

      Lynne

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  4. Lynn
    I'm in a blended family in BC. 5 years together, 3 years living together.We both came into the relationship with minimal but approximately equal assets. The house we live in is in both our names and we both pay into it. This last year my common law husband is in a job making 5 times what I make. We have 4 teenagers, 2 each from a prior marriage. We are discussing life insurances and wills and how to make things fair for the future if something happens. How does this become fair if the bulk of assets are created when we have been together? I'm concerned if he died first I would be left with nothing but debt, loose the house and his childen will get the million dollar life insurance policy. Who can I talk to? Will/estate lawyer??

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    Replies
    1. Yes, a wills lawyer would be able to provide you with some ideas and options. As a general rule, parties in blended families will keep what they brought into the relationship (or leave that to their respective children) and split evenly the assets that were bought or built during their time together.

      Certainly there are matters that need individual attention. Perhaps one or more of the kids needs more help than the others. Maybe the fact that your husband makes more than you do is allowing him to accumulate more assets. Perhaps life insurance should be in place to replace his income so that you can maintain the house. A life insurance policy can be split between various beneficiaries.

      If he is making a good income, perhaps he is putting funds into registered plans such as RRSP or TFSA. These might be left to you even if the insurance goes to his children.

      When you talk to the wills lawyer, all of the pieces - the will, POA, insurance, RRSPs, etc - all have to work together to ensure that everyone is looked after and all goals are met.

      Lynne

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  5. In 2002 I moved in with my boyfriend. Shortly after, his ex wife got a last will and testament prepared for him leaving her with the property and medical power of attorney.In the year 2020 we have decided to get married. Once we marry, does this will that was made up years ago become null in void? We live in Ontario

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    Replies
    1. In Ontario, a marriage does revoke an existing will. However, I should point out to you that it is not possible for his ex to get a will prepared for him unless he agrees and signs it. So it seems to me that he is okay with the current will if he is willing to sign that will and leave it in place until at least 2020. Good luck.

      Lynne

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