The Moncton Times and Transcript
Money, Monday, August 16, 2004, p. B3
TORONTO (CP) - In an ideal world, much of estate planning wouldn't be necessary because the surviving family members would simply divide everything equitably and that would be that.
In the real world, estate planning is essential - especially when the family includes spouses who have previously been married to other people.
"There are no end of situations which become litigious because of second marriages," says Kimberly A. Whaley at Toronto law firm Dickson MacGregor Appell.
Spouses who stay married until parted by death typically hold everything in joint ownership. When one dies, the other gets the entire state, to be eventually handed down to the children.
"In a blended family situation, what happens is they put everything in joint ownership, one of the spouses dies, everything goes to the other spouse," says Investors Group estate planning lawyer Christine Van Cauwenbergh.
"The other spouse hasn't done any planning either and either they have a will that says 'Everything is going to my kids,' or they don't have a will and then everything goes to their children. But children means natural children or adopted children - it doesn't mean stepchildren."
The result, Van Cauwenbergh says, can be that one branch of the family gets disinherited.
It can get more complicated, she adds.
"The surviving spouse remarries, and now someone else is entitled to if not all then a good part of the estate. Or they put their assets in joint ownership and it goes over to the next branch. It's a very regular occurrence in Canada."
One thing couples who marry more than once can do is keep their assets separate. To fill the financial needs of a surviving spouse who has insufficient personal assets, they should consider a spousal trust.
"You can have different types of spousal trusts set up which may assist in addressing concerns where there are children beneficiaries," says Whaley.
"For instance, if there is an investment of monies, income or dividends could be generated to benefit the spouse."
She noted that often the spouse could get more than the amount provided for, depending on the authority granted to the estate trustee and whether encroachment provisions exist which grant wide discretionary powers.
With wide discretion, there is a risk that the estate's assets may be depleted by the end of the surviving spouse's life.
Spousal trusts aren't for everybody. A well-off spouse may think it would be best for the other spouse to own all the assets, rather than feel guilty every time he or she takes money out of a trust because the children are being deprived.
Van Cauwenbergh suggests one way of dealing with this could be to set up an insurance policy naming the children as direct beneficiaries.
"So the spouse gets the estate and the kids get the insurance," she said.
"And quite frankly, that's oftentimes the cleaner and less difficult way of dealing with it."
Category: Economy
Uniform subject(s): Personal investments and finance; Laws and regulations
Subject(s) - The Moncton Times and Transcript : Assets; Children; Couples; Handing; Remarried
Length: Medium, 394 words
© 2004 Times & Transcript - Moncton. All rights reserved.
Doc. : news·20040816·MT·208160527
