Drafting a will is a common reason to visit a lawyer. A will is an important document that sets out what happens with assets upon death.
Depending on your wishes, it may be prudent to seek not only a lawyer who is skilled in the area of estate planning but also one who has the requisite family law knowledge. Without the required understanding of family law principles, goals for estate planning may create one or more family law issues.
The following are common examples of how family law concepts interplay with estate planning:
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- Appointment of a legal guardian: If you care for minor or dependent children at the time of death, your will can be used to specify your preference for a guardian for such children. Appointing a guardian and how that may impact matters in a separated family may require further discussion with a family law adviser.
- Claims by spouse against the estate: If you have a spouse when you die, you may have obligations to that person under the Family Property Act or the Dependent’s Relief Act. It is not uncommon, especially in second marriages, that spouses wish to leave their estate to their children and not benefit their second spouse.
While that is fine from an estate planning concept, it exposes the estate to a claim from the surviving spouse. To prevent such a claim, it would be vital for the spouses to also enter an interspousal agreement waiving rights against the other’s estate.
- Claims by other dependents against the estate: If adequate provisions are not made by an estate for any dependent (spouse or dependent children), then a claim can be brought against the estate for reasonable maintenance. If you have (or could have) any form of support obligation (i.e. child support or spousal support), it is important to consider what obligations your estate may have to that dependent if you die during their dependency.
- Tax planning strategies with eligible dependents: Certain individuals may be better suited to receive certain assets from your estate to postpone the payment of income tax. For example, land or registered investments can be transferred to your spouse upon your death on a tax deferred basis.
This means no tax is triggered upon your death and your spouse can benefit from the asset during their lifetime. If you leave your land and/or registered investments to a child, in most circumstances tax will be triggered upon your death.
- Family property claims against beneficiaries: People generally want their estate to benefit their named beneficiary and not that person’s spouse if they separate. Inheritances in Saskatchewan are considered shareable family property, so if you leave a gift to someone (i.e. a child) in your will and after that person receives the gift they separate from their spouse, that gift is exposed to a family property claim and could be divisible between the child and their spouse.
Stating in your will the intention to not expose a gift to a family property claim is not binding on the recipient of the gift or their spouse. To protect gifts to your intended beneficiary, it may be necessary for the beneficiary and their spouse to enter an interspousal agreement to exempt from division any gifts and/or inheritances either may receive.
- Placing property into joint names: People may choose to place property into joint names for estate planning purposes, often in an attempt to avoid probate fees upon death. By placing property in joint names, when one person passes away, the real property will transfer to the surviving owner.
While this may smooth the process of the land transfer upon death, it can create numerous other issues during one’s lifetime if not done (and documented) correctly.
If you place a child’s name on the land, you are exposing your property to a potential family property claim by the child’s spouse. If you put your spouse’s name on the land, you may potentially lose an exemption claim under the Family Property Act if one previously existed.
To minimize these risks, it is important to properly document your intentions and goals in adding someone’s name to your real property to avoid unintended consequences.
While these examples are common, there are effective strategies to prevent such undesirable outcomes. When talking to your lawyer about estate planning, be sure to consider how family law concepts may impact your overall goals.
Kimberly Visram is a lawyer, mediator and partner with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be contacted at kvisram@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice.
