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06/07 - W. Michael Thomas

     Blended Families Create Estate Challenges

Blended families are becoming increasingly common with the marriage or common-law relationship of partners with children from previous relationships.  This new situation brings complexities to your estate and your will should be reviewed to ensure that your assets are distributed according to your wishes after you die.
Getting married, in most provinces, voids any previous will unless that will was written in contemplation of that marriage.  So even if you included your children as beneficiaries in a previous will, when you get married that will may be invalid.  Even re-executing a standard will may not provide guarantees that your children will receive the inheritance you’d like them to have.
For example, assume you are in a blended family, pass away, and leave everything to your spouse under your will.  In these circumstances, you should know that your surviving spouse is not required to give any money to your children from a previous relationship at the time of either your death or their death.  And, even if your spouse wants to leave money to your children (their stepchildren) under their will with a general direction that all assets go to “the children,” the law generally interprets this to mean their natural-born and adopted children, and may not include stepchildren.  In this case, your standard will may not provide the inheritance you want your children to receive.
One way to help ensure that your children from a previous relationship receive the inheritance you wish them to have is to bequeath a set amount to them in your will, leaving sufficient assets to your surviving spouse from the remainder of your estate.
Also, by carefully selecting the right type and amount of life insurance and possibly designating beneficiaries directly through your policy, you can use life insurance to help increase the assets available to meet the needs of both your children and your surviving spouse.
Other complexities include the fact that different jurisdictions have rules that work in unexpected ways.  For example, in some provinces a marital home brought into the new marriage by one spouse may be shareable even if it was fully paid for prior to the marriage.
Quebec operates under a different code of law from the other provinces and may require different estate solutions.
For these and many other reasons that could significantly affect the financial security of your blended family, you may wish to seek advice from a qualified estate lawyer.

W. Michael Thomas is a Partner at The Investment Guild (the Investment Guild is a People Corporation company)

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