Different types of relationships bring different challenges in estate planning. Avoid gaps in your estate plan by taking these challenges into consideration.
Most of the estate planning information you will find online caters to people in traditional relationships or with traditional family structures. A lot of resources assume that you are legally married with one spouse with whom you may or may not have children. This extends to most of estate law, which is based on the nuclear family - two spouses with or without biological or legally adopted children.
This family structure makes estate settlement fairly simple. In the majority of cases, the surviving spouse takes over the estate, and when they pass the estate is split amongst the children. With this basic estate plan as the default, any person whose relationship or family does not fit under this structure is left vulnerable and inadequately prepared to care for their loved ones when they pass.
A survey done by STEP and TMF found that 71% of estate planning professionals are finding that the increase in complex family dynamics has led to multiple challenges, including litigation or a breakdown of family relationships. Many laws and legal definitions are outdated, and can lead to confusion and disagreements in estate settlement.
There are many forms of non-traditional relationships and families, but we have outlined five of the most common, along with steps you can take to best plan for the future.
1. Estate planning for single parents
An estate plan is about much more than who will acquire the monetary value of your estate. If you have children that are still dependents, your estate plan also ensures that they will be properly taken care of by someone you trust if you were to pass away or become incapable of caring for them due to illness or injury. Legislation for standby guardianship (in the event of illness or injury) varies across Canada so it’s important to speak to a family lawyer about what your options are in your province or territory. For example, in BC, it’s possible to appoint a standby guardian to care for your children if you’re temporarily unable to. However, the legal framework for this type of guardianship doesn’t exist in every province and territory.
If there is another parent present in your children’s lives, they will most likely assume full custody if they are willing and able. If there are challenging dynamics at play with the children’s other parent, seek the advice of a family lawyer. Otherwise, you will need to designate someone in your will who has consented to caring for your children. Step-parents do not automatically become guardians, so if you want a step-parent to be your children’s guardian you must legally appoint them.
(Note: EstateBox’s upcoming children and dependents stream will help you capture all the details of your children’s lives including medical history, important relationships, daily routines, and your hopes for their future. If the unthinkable were to happen, making this information available to their caretaker or guardian would help your children maintain some stability during an already stressful and difficult time.)
In terms of leaving your assets to minor children, it isn’t as simple as putting them in your will. Underage children are unable to receive inheritance or property until they are of legal age. If you don’t make the proper arrangements yourself, your child’s inheritance will be placed in a trust and a court appointed trustee will manage the funds until they are of legal age. If you want a friend or family member to be the trustee, or if you want to place specific stipulations on the inheritance you need to plan in advance. We will talk more about using trusts later on.
2. Estate planning for divorced couples and blended families
Given the fact that 96% of professionals now advise blended families, it seems strange to label them as non-traditional, but estate law is murky when it comes to supporting children from previous marriages. In Canada, stepchildren do not have inheritance rights, which means they do not have to be included in the stepparent’s will, nor are they entitled to any portion of their estate. The age of the children, when they came into the stepparent’s life, and the duration of their relationship doesn’t matter.
What does this mean? If you have children from a previous relationship, but leave your estate to your new spouse, they can legally exclude your children from their will. This means that your children will not receive anything from your estate. It is wise to specifically include your children in your will to be certain that they are cared for after you pass.
If you are divorced (with or without children) take special care to ensure that your ex-spouse is removed as a beneficiary from all insurance policies, investments, bank accounts, etc. In most cases a designated beneficiary will override the will, so updating your beneficiaries in addition to your will is extremely important.
3. Estate planning for polyamorous relationships
Having multiple partners makes estate planning slightly more complex, since by law in Canada, you can only be legally married to one person at a time. If you are legally married to one partner but not the other, the unmarried partner would have a difficult time proving their right to a portion of the estate in court, should you pass without a will.
It is important to note that polyamrous relationships are not considered common-law relationships in any province or territory, no matter how long you’ve lived together. Making sure your will and designated beneficiaries are specific and reflect your wishes is the best way to ensure all your partners are taken care of. If you aren’t splitting your estate equally among all partners, make sure to have a conversation with your partners about your rationale.
4. Estate planning for queerplatonic relationships
Another type of non-traditional relationship that may be overlooked in the average estate plan is a queerplatonic relationship. These relationships may not be romantic but that doesn’t mean they’re insignificant. If you’re in a queerplatonic relationship and decide to get married, your estate planning will likely look similar to any other married couple, unless you have a blended family.
For people who decide not to get married or live together, it’s important to have the correct legal documents in place that will fully reflect the depth of the relationship and life you shared with your partner.
5. Estate planning for common-law relationships
For federal tax purposes in Canada, a relationship is considered common-law or a “de facto” relationship when a couple has continuously cohabitated together for at least one year. This means living together, combining assets, and setting up a household in one dwelling. Because estate law varies across Canada, each province and territory has their own definition of and criteria for common law relationships. Check out our resource that covers the different definitions of common-law relationships in each province or territory.
Recent census data shows that 23% of Canadian couples are living common-law, the largest percentage in the G7. It is likely that many of these couples are unaware that they do not have the same rights as married couples when it comes to estate law. Rights to property and assets vary by province and territory, but in many cases common-law partners are only entitled to everything they own or co-own. If you pass without a will, your common-law partner would have to go through lengthy court proceedings in order to claim your estate. Creating a will and naming your spouse as a beneficiary is extremely important in common-law relationships.
In Québec common-law partners are not considered each other’s legal inheritors unless specified. This means if one partner dies without a will, the surviving partner may not inherit any of their partner’s estate.
Estate planning when relationships aren't accepted by family
Unfortunately, non-traditional relationships still aren’t accepted by everyone. If your family is either unaware or not accepting of your relationship(s), your estate plan needs to be ironclad. If there is no will and no executor, your family can fight in court to take hold of your assets and assume the role of distributing them. This would put your partner(s) at risk of being forced to leave the home they shared with you and losing assets.
It would also be a major stressor for your partner(s), both emotionally and financially - especially since the relationship between them and your family is likely already strained. To avoid this and take care of your partner(s), review all of your assets and designated beneficiaries carefully, and make sure your will is updated regularly.
If you are excluding family from your will entirely, it is wise to state this explicitly. Instead of simply not writing them into your will, state that you are purposefully not including them. Keep in mind that if you’re attempting to disinherit a child under the age of 18 or spouse from your will, it may be challenged in court. In BC, WESA (WESA (Wills, Estates and Succession Act) allows judges to rebalance a will if it doesn’t provide adequate and just provisions for a spouse or child.
If you wish to give more personal explanations to your family you can also write letters to include with your will to further explain the choices you have made in your will. This statement of intent can help protect your partner(s) from legal battles over your assets and make it clear to your family that they need to respect your wishes.
Tips for solid estate planning
No matter what kind of non-traditional relationship or family you have, there are a few ways to reinforce your estate plan to protect those you love.
Give your partner rights - the laws won’t
The current estate laws do not protect unmarried partners or unadopted non-biological children. It is up to you to provide the rights to your estate for your partner through your will, power of attorneys, trusts, etc. You must take extra care to ensure that your assets will be distributed as you wish. Furthermore, make sure all of the legal documents you create are available to the right people (hint: EstateBox can help with this)!
Be mindful of who you are giving rights to
On the other hand, giving new partners too many rights can harm your other loved ones, especially children from previous relationships. As mentioned earlier, it is always wise to take care of your loved ones through your own will, rather than assuming your partner will do so after your passing.
Use prenups
Getting married when you have existing assets, complex finances, or children from a previous relationship makes estate planning more complex. It's important that you and your spouse discuss how you plan to divide your finances. A prenuptial agreement will make clear your intentions, and protect the rights of your existing children when you pass.
Use trusts (in addition to your will)
A will is a necessity for every estate plan, but some situations require additional planning, with more flexible legal documents. There may be assets that you want your partner to be able to use for as long as they live, but ultimately be passed down to your children. For example, a trust will allow you to give your partner the right to live in your home for as long as they need, but it ultimately belongs to your children and will be owned by them once your partner passes.
Stay organized
Estate planning for non-traditional relationships or families involves an added level of consideration to current estate laws and how they will or will not protect those you love. Getting and keeping your affairs in order is a key component in a well done estate plan. With EstateBox you can not only store and document the intricacies of your life, but make sure that the right people have the information at the right time.
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