As people live longer, healthier, more active lives these days, it is not at all unusual to see marriages between individuals in their 60s, 70s and beyond. If you are among these happy folks, it is important that you turn your mind to estate planning. Booking the honeymoon in the Bahamas or working on the guest list is a lot more fun than thinking about your eventual demise, but there are plenty of people in your life who are depending on you to get this right, legally and financially.
When most of us married in our 20s, the majority had no previous children and no assets at the start of the marriage, which is generally not the case for those getting married later in life. You will have to update your estate plan to meet your new legal obligations while protecting your existing obligations. It can be a delicate balancing act.
As of 2012, marriage in Alberta no longer automatically revokes an earlier will. In one sense this is a very good thing since you will not be left with no will at all should you fail to update this document. However, consider the fact that under current Alberta law, a spouse has the legal right to be supported by his or her spouse’s will. In reality, this means that if you have an older will that does not provide for your spouse and, in fact, does not even mention him or her, there could well be a lawsuit to determine your spouse’s rights under your estate.
It is a far better idea to go through the estate planning process with your spouse, agree on what will happen with the house, the accounts, and other assets if one of you should pass away, and document these plans in your will. If you do not plan to leave your entire estate to your new spouse—and most people do not plan to do so—you can deal with this in your document.
It is important to move beyond theoretical ideas such as leaving ‘half’ to someone, and get down to a detailed discussion of your specific assets. Part of the pre-nuptial estate planning conversation should be about beneficiary designations on RRSPs, RRIFs and life insurance policies. If you plan to divide your estate between your new spouse and your children from a previous marriage, a discussion about which assets should go to which person (and when that should happen) can be immensely valuable.
For example, you may wish to designate your new spouse as the beneficiary of a registered asset such as a RRIF to gain the tax advantages of a spousal rollover, and leave everything else, including your house, to your children. However, you might change your mind once you realize that in Alberta, a spouse still has a Dower right to live in the matrimonial home for the rest of his or her life, thereby preventing your children from inheriting it while your spouse is alive.
Your will should also deal with practical matters such as naming an executor. Naming the new spouse to administer your estate may breed resentment in your children. Naming one of the children rather than the spouse may leave the spouse in a powerless position. You need to be realistic enough to admit that if you were to pass away, there may be no emotional bond between your children and your new spouse. This aspect of second-marriage estate planning is almost universally overlooked, to the detriment of the estate itself and the family members left behind.
One more consideration is how your children are going to feel about your new marriage. I don’t mind telling you that I am frequently consulted by people whose older parents are re-marrying. They want to know what their ‘rights’ are when a parent marries.
The issue for your children may be that they are worried that the new spouse is going to receive your entire estate one day, leaving them out in the cold. There is some basis for their concern in that older people do, from time to time, fall prey to a predatory spouse. I have seen my share of housekeepers and caregivers who suddenly, and unexpectedly, become wives to men forty years their senior shortly before said man passes away. Such dramatic occurrences are not the norm, but your children may become worried or alarmed even in the absence of any predatory or opportunistic person.
This situation is partly a concern on their part about you and partly a concern about themselves. When parents pass away, children equate the distribution of the estate with the distribution of a parent’s love. This statement may sound simplistic, but it has proven to be the case over and over again. Someone who is left out of a parent’s will is cut to the quick by the perception that the parent did not care for him or her, which leads to more lawsuits than anything else. They will blame your new spouse for any disappointments or surprises. Children who receive less than they expected frequently state that their parent actually wanted to leave more to them, but the new spouse ‘made’ him or her change the will.
Once you have dealt with your estate planning and have your new documents in place, you should consider having a meeting with your children. You do not have to tell them how much money you have or what you are worth. However, it would be a good idea to reassure them that you are in control of your decision-making and have had a thorough conversation with an estate planner. Talk about whether anything is going to change in terms of using the cabin or RESPs you might hold for their children. Let them know if any of them are expected to act under a power of attorney or your will when the time comes.
If you are re-marrying, taking the time to give your estate plan a reboot may save your spouse and your children needless heartache, stress, disputes and financial loss.
This article has been reposted with permission from Lynne Butler, author of severalSelf-Counsel Press titles on Estate Planning, and was first published in the Autumn 2014 issue of the Alberta Retired Teachers’ Association magazine News & Views.