Estate Planning in the Ontario Wedding Season

It’s summer and everyone gets invited to a wedding.

Did you know that a marriage revokes all wills? There are exceptions for those wills expressly made in contemplation of marriage to a new spouse.

In a Second Marriage

Marriage creates new property, support and tax rights for your new spouse. These can trump any other person’s rights.

You must use a marriage contract if you wish to modify these statutory rights. You cannot just gift all your assets away and think they cannot be attacked by your new spouse in a lawsuit.

Marriage contracts are expensive. They take months to prepare. Unless there is a substantial disparity of wealth, you may not want to consider one.

Not Getting Married?

People think living together is not as difficult as if you got married. Well, common-law spouses have benefits under income tax and pension laws. Common-law spouses do not have automatic rights to support or property.

Take Paul who resided with Jane for 15 years. They each shared all house payments, but the house was in Jane’s name alone.

Jane died without a will. What happens to Paul? 15 years or 35 years together still does not give Paul a share in the house unless he is on title, or the house is given to him in Jane’s will.

Paul must hire a lawyer and sue Jane’s estate as a common-law spouse to claim an interest in the property. It can take 3-5 years to resolve such disputes.

Does Living Together Affect Your Assets?

In Ontario, common-law spouses have support rights if a child is born or if partners have lived together in a conjugal relationship for more than three years.

Cohabitation agreements are not commonly prepared. They are expensive and require each partner to have an independent lawyer. They can help, however, if the agreement is up to date.

Most contracts can become out of date in 5 years. The agreement must address any changes. For example, the agreement must reflect circumstances where a partner quits working because of the birth of a child or health issues.

How Do Relationships Change Estate Planning?

Whenever there is a change in your relationships, you must revise your estate plan.

With a marriage, you will need to revise wills, designated beneficiaries on RRSPs, life insurance, tax-free accounts, and pension, drug and health plans.

Any change in a relationship can also mean you must change your executors, estate trustees and have new namesfor attorneys and guardians for children.

To learn how marriage affects your estate planning, read Estate to the Heart: How to Plan Wills and Estates for Your Loved Ones.