Many families are beautifully complex, formed by second marriages, remarriages, or cohabiting relationships, and often include children from previous relationships. These “blended families” bring a unique richness to our communities. However, when it comes to estate planning, this complexity requires careful consideration. For all families, planning for the future is crucial, but for blended families, it takes on an added layer of importance to ensure everyone is provided for and your wishes are honoured.

Defining “family” and understanding the law

Provincial legislation sets out the legal framework for estate matters. It’s important to understand that the legal definitions of terms like “spouse,” “child,” and “family member” may not always align with personal definitions. For example, common-law partnerships and/or adult interdependent relationships, have specific legal criteria, and determining who qualifies as a dependent can significantly impact inheritance. These legal definitions will directly affect who is entitled to what from your estate. It is key to clarify these matters to avoid unintended outcomes or potential disputes later.

The cornerstone: An up-to-date estate plan

For any individual, and especially those in a blended family, a valid and comprehensive estate plan is essential.  While a will is a critical component that clearly outlines your wishes for how your assets should be distributed, a complete plan also includes documents that manage your affairs during your lifetime.  Key among these are an Enduring Power of Attorney (or similar document, such as a power of attorney for property) and a Personal Directive (or similar document, such as power of attorney for personal care or a health care directive), which name trusted individuals to make financial and health/personal decisions for you if you become incapacitated.  Life events such as marriage, divorce, the birth of a child, or even a significant change in relationships should trigger a review and potential update of all your estate documents. Estate planning lawyers and nearly all online estate planning services, like Willful, include a revocation clause, which revokes any previous versions, ensuring there’s no confusion about which document should be followed.  

Beyond the will: Beneficiary designations

It is critical to understand that not all assets pass through your will. Policies or plans like life insurance policies, Registered Retirement Savings Plans (RRSPs), and Tax-Free Savings Accounts (TFSAs) with named beneficiaries go directly to those beneficiaries (unless the estate is the beneficiary), not through your will.  Similarly, generally assets in joint ownership with a right of survivorship (such as a joint bank/investment account or property held in joint tenancy) automatically transfer to the surviving owner. Reviewing and updating beneficiary designations is therefore just as crucial as having a current will. Make sure these designations reflect your current intentions, particularly in light of changes in your family dynamics.

Potential for conflict and mitigation strategies

Blended families, by their very nature, can face an increased risk of potential disputes among family members. Differences in expectations or feelings of fairness can sometimes lead to disagreements. Clear and open communication with your family about your estate plans can help mitigate this. Specifying particular bequests, such as leaving jewelry, art, or property to certain individuals, can also reduce the likelihood of misunderstandings.

Utilizing testamentary trusts

One of the primary estate planning goals is often to protect children’s inheritance, particularly in blended family situations. Testamentary trusts, which are trusts created within your will, can be highly beneficial for this. A spousal testamentary trust is a particularly important tool in this context. It allows you to provide for your surviving spouse for their lifetime—often giving them access to the income or even the capital of the trust—while ensuring that the remaining assets pass to your children (or other designated beneficiaries) after the spouse's death. This structure is vital for controlling how and when your assets are distributed to beneficiaries, especially children from previous relationships, preventing the surviving spouse from altering the final distribution.

Cohabitation agreements, prenuptial agreements and property matters

For those in cohabiting relationships, a cohabitation agreement can play a vital role in estate planning. Similarly, for those entering a second marriage, a prenuptial agreement is a key planning tool. These agreements outline specific arrangements regarding assets and property and how they will be treated in the event of separation or death. Property ownership also impacts estate distribution. If a property is held in joint tenancy with right of survivorship, it automatically passes to the surviving owner. If it is held as tenants in common, each owner’s share forms part of their estate. Understanding these distinctions is critical.

Guardianship of minor children

If you have minor children, naming a guardian in your will is one of the most important decisions you'll make. Outline any specific wishes you have for their care and upbringing. This ensures that your children will be looked after by someone you trust in the event of your passing.

Seeking professional guidance

Estate planning can be complex, and every family’s situation is unique. Consulting with an experienced estate lawyer is highly recommended. They can help you navigate the legal complexities, ensure your will is valid, and create an estate plan that aligns with your wishes. It may also be wise to consult with accounting and investment advisors for more specific financial questions, as they can provide insights related to your individual circumstances.

Documentation and record keeping

Maintain accurate records of all your estate planning documents, including your will, beneficiary designations, and any relevant agreements. Keep these documents in a safe place and inform your personal representative/executor or trusted family members about their location.

Conclusion

Proactive estate planning is essential for everyone, but especially critical for blended families. By understanding the legal landscape, having well-drafted estate planning documents, reviewing beneficiary designations, and addressing potential conflicts, you can provide security and peace of mind for your loved ones.