The divorce rate being what it is in this country, it is always surprising that there are so many intrepid souls out there still wanting to give it another go. True love always finds a way, but it brings its own set of problems not just in the matrimonial context but also when making plans for your estate.
Fortunately the solution to these problems is readily available. Persons thinking about remarriage need to consider a marriage contract. This can be used to settle legal rights in the event that the second marriage does not work, but it also can be used to settle legal rights in the event of the death of a spouse.
The responsibilities you bring into the second marriage probably includes children who are now adults or on the verge of becoming adults and in any event who would expect to receive some benefit from your estate in the event of your demise. While it is common to want to make sure that your children from your first marriage are looked after, this must be balanced with the needs of your newfound spouse. This discussion needs to take place before the remarriage is celebrated. You may lose a valuable bargaining position if you choose to marry first and ask questions later. The marriage contract can carve out the assets of each of you that are to be preserved for your respective children. The contract will take precedence over any subsequent will made by either party and will govern your affairs in the event of your untimely death.
In truth, you can make such a contract any time, but the rules change when you marry. Part of the problem arises from the fact that legal rights accrue by statute on marriage without the intervention of either party. In the absence of an agreement, the normal rights of a spouse on marriage breakdown will be triggered by the death of either spouse, which one might characterize as a “permanent” marriage breakdown.
It is also important to remember that under Ontario law any existing will that you have is automatically revoked by your subsequent marriage. If you do not make a new will, your estate will be distributed under a formula prescribed by a statute called the Succession Law Reform Act. The provisions of this statute may or may not reflect what your wishes would have been had you applied your mind to the problem of distributing your assets after your death. At the very least, a new will can save your heirs a couple of thousand dollars in legal fees, which will necessarily be incurred for the court application to probate your estate without a will.
On the other side of this coin are the persons who choose not to marry but to live in a common-law relationship. This often occurs where seniors live together but want to preserve their rights to a survivor’s pension from a previous spouse. There is absolutely nothing wrong with this situation except that if you are not going to remarry, you need to remember that your existing will has not been revoked. The terms of this will may only have applied to the circumstances of your previous relationship. Compound that with the fact that if you die without a will, a common-law husband or wife is not included in the definition of spouse under the Succession Law Reform Act and the result will be that your newfound love is going to be unprotected in the event of your demise. A common-law spouse must be specifically named in a will in order for him or her to benefit.
You will also want to ensure that you do not visit your previous matrimonial difficulties on your second spouse if he or she survives you. When you are making a will in this situation, you must make adequate provision in your will for any legal obligations that you have incurred for spousal or child support. Normally this arises by way of divorce order or separation agreement, but the legal obligation to support a spouse may still exist without any agreement being in existence and without any support payments being made at the time of your death. If you fail to make adequate provision for a spouse or a former spouse in your will, that spouse may make a claim against your estate and inflict a whole new series of headaches upon your surviving spouse. All of these issues can and should be discussed with
Finally, it is important to consider the subject of insurance and pension designations. These assets will pass outside your estate when you name a specific beneficiary.
So, as part of your estate planning, you need to review all of your pension and insurance designations to make sure that they conform with your present needs. If your new will refers to these items, it is important that they say the same thing. There is a remedy for almost every situation that arises — and the peace of mind that this resolution will bring is bound to provide a better foundation for your new relationship.
What the Words Mean – Estate Planning Terminology
When making decisions concerning your estate, it is likely that you will encounter several terms you may not have heard before. Here is a glossary of a few of the most commonly used estate terms.
Your estate is the total of all of your interests and/or holdings in land and other types of property such as investments, retirement savings, business interests, etc. that you have at any given time — in other words, your “assets.”
The process of organizing your assets and preserving your wealth during your lifetime to meet your needs and planning for the tax effective distribution of your assets upon your death.
Power of Attorney
A power of attorney allows you, during your lifetime, to give another person the authority to act on your behalf in certain situations. In estate planning, this document is used to plan for incapacity resulting from accident or failing health. When you give another person a Power of Attorney, it can be unlimited or limited. Essentially, you decide how much “power” you feel comfortable giving to another.
A will is a document that sets out your wishes for the distribution of your property upon your death. There are certain rules and requirements for a will to be valid. If you do not make a will or if your will does not meet the legal requirements, provincial laws will determine how your property is distributed.
This glossary was taken from the Nelligan O’Brien Payne LLP Estate Planning Guide.
John Johnson is a partner with the law firm of Nelligan O’Brien Payne LLP (www.nelligan.ca) with offices in Ottawa, Kingston, Vankleek Hill and Alexandria.
[This article was originally published in the November 2004 issue of Fifty-Five Plus Magazine.]