Drafting a Will may be one of the most common reasons people visit a lawyer. A Will is an important document in that it sets out what happens with your assets upon your death. Depending on your wishes it may be prudent to seek out not only a lawyer who is skilled in the area of estate planning but also one who has the requisite family law knowledge as well. Without the required understanding of family law principles your goals for your estate planning may create one or more family law issues.
The following are some common examples of how family law concepts interplay with estate planning:
- Appointment of a legal guardian
In the event that you care for minor or dependent child(ren) at the time of your death, your Will can be used to specify your preference for a guardian for such child(ren). Appointing a guardian and how that may impact matters in a separated family may require further discussion with your family law advisor.
- Claims by spouse against the Estate
If you have a spouse when you pass away, you may have obligations to that person under The Family Property Act or The Dependent’s Relief Act. It is not uncommon that, 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. In order 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 dependent’s 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 should you pass away 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. Whereas 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 this means if you leave a gift to someone (i.e. a child) in your Will and after your child 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. Putting your intention to not expose a gift to a family property claim in your Will only states your intention and 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 quite commonplace there are effective strategies that can be put in place to prevent such undesirable outcomes. Therefore, when talking to your lawyer about your estate planning be sure to consider how family law concepts may impact your overall estate planning goals.
Kimberly D. Visram
STEVENSON HOOD THORNTON BEAUBIER LLP
500 – 123 2nd Avenue South, Saskatoon, SK S7K 7E6
Telephone: 306-244-0132
Email: kvisram@shtb-law.com
Facebook: https://www.facebook.com/KimberlyVisramLegal/
The information in this article is not legal advice. We encourage you to consult with your legal advisor for advice specific to you.
This article was originally published in The Western Producer on March 1, 2024.