May 15th 2024
For families that have children from previous relationships, the conversation around estate planning can involve some uncertainty. A parent may question what happens to their estate when they pass away. For instance, a partner may wonder if their children from a previous relationship will be protected, and they may want to preserve a portion of the equity of their estate for their children. This article considers this issue after reviewing some of the default legal rules for estate planning. Thankfully, there are a variety of solutions available to parents in blended families looking to plan their estate. Hopefully, by the end of this article, you will have an appreciation for the ways blended families can plan for their estates with confidence and clarity.
One recent change to Ontario’s succession law means that getting remarried no longer automatically revokes a prior existing will. Instead, any former spouse is treated as having died before you for the purpose of your will. One challenge that results from this involves child support and spousal support. These obligations are treated as a debt against the estate, so setting up specific provisions to deal with these monies owed in your will can assist the executor in managing such payments. Beneficiaries are likely to receive their inheritances from the estate more quickly when uncertainty surrounding such support obligations are removed.
Another issue relating to the rules surrounding remarriage and your last will and testament involves the rights of your current married spouse. A married spouse is, by default, entitled to an equalization of family assets. Section 5(1) of the Family Law Act states that when married parties can no longer cohabitate, “the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them”. Understanding how net family property is calculated is outside of the scope of this newsletter and must be addressed in a separate article. For now, it's important to note that unless there exists a prenuptial agreement or marriage contract, the right of a married spouse to a share in the matrimonial property means that when married persons are excluded from the will or receive less than what they are entitled, they can elect to have equalization enforced by the Court pursuant to section 6(1) of the Family Law Act.
Knowing a married person is entitled to equalization creates additional questions for parents in a blended family. Parents may want their children as named beneficiaries alongside their married spouse. Unless there is a marriage contract, an estate must ensure a fair distribution of assets to spouses as well as named children, or risk conflict between biological children and their stepparents. Additionally, stepchildren have no automatic entitlements to an estate. For this reason, it is entirely open to a spouse who has received the inheritance of their spouse to prepare a will that does not include the children of their deceased partner. This can be especially troublesome for stepchildren who may have expected an inheritance from their biological parents.
One common issue for estate planning is that the principal residence is often the largest source of equity available to an estate. Attempting to leave a portion of this equity directly to children creates challenges for married partners. No portion of the equity in a matrimonial home can be deducted as equity brought into the marriage by either party, meaning that regardless of who is on title, the total equity of this asset is subject to equalization. This means that without a marriage contract, a married partner in a blended family who brings a home they own into the marriage may ultimately have much less to distribute to their children directly than they might have expected. It is worth noting that dying without a will and having less 
than $350,000 in estate value means your biological children receive nothing. A married spouse on intestacy is entitled to this property absolutely, and this is called the “preferential share”. It means married parents with children from a previous relationship must not assume that their children will inherit anything when they pass away and are strongly encouraged to prepare their will in the event of separation and remarriage.
Certainly, this newsletter cannot attempt to address all of the myriad ways in which parents in blended families may balance the needs of their children and spouses. In our next newsletter, we will consider the situation of common-law couples and how their estate plan can be managed in a blended family. It is worth noting that individuals in blended relationships consider working with a trusted insurance professional alongside their legal counsel to create an estate plan that addresses the concerns outlined in this article. It is good practice for each partner in a blended family to speak with a separate lawyer regarding their estate planning goals since there may be options that can be comfortably canvassed with independent legal counsel. Ultimately, seeking advice for estate planning in a blended family situation is highly recommended. If you need sound advice for your estate planning options, be sure to contact Liddiard Law today. I can be reached by email at michael@liddiardlaw.ca
Michael C. Liddiard, BA MA JD
michael@liddiardlaw.ca