Families today often look a lot different than the nuclear family in Leave it to Beaver. According to the 2021 census, there are over 500,000 blended families in Canada due to divorce, remarriage, or co-parenting, with one or both partners bringing kids into a new relationship.
Blended families often have special considerations when it comes to estate planning, since they may be planning for children, stepchildren, spouses, and other family members. If you’re part of a blended family, it’s normal to be confused about what those special considerations are, and to put off getting a plan in place.
In this article, we’ll break down what you need to know to ensure you pass on your assets effectively and efficiently while considering all members of your blended family.
If you’re part of a blended family, you can absolutely use a platform like Willful to create your will, however you may want to visit a professional if you want to use trusts (eg. spousal trusts) to protect how assets pass to your children in future.
What Does “Blended Family” Mean in Estate Planning?
A blended family is when a couple has children from a previous relationship.
For example, when Willful co-founders Erin and Kevin were young, both of their parents divorced and remarried people who also had children. They are both part of blended families with stepparents and stepsiblings, and other new extended family members.
A blended family can also include new children - for example, Erin’s dad and stepmom had a daughter, Erin’s half-sister.
Depending on when the blended family was formed and who is involved, this can change someone’s estate plans - for example introducing new potential beneficiaries, and creating special considerations around how assets should pass on to a second spouse vs. children.
Common Family Structures That Create Blended Families
- Remarriage - marrying someone else after a separation, split, or divorce
- Common law relationship or marriage - entering a new common law relationship or marriage where one person already has a child
Why Estate Planning Gets Complicated With Blended Families
Estate planning for blended families can be more complicated since there are often a new partner or spouse and/or non-biological children involved, and this can change the way people appoint key roles in their will or power of attorney documents, or how they would want assets to transfer.
Let’s use an example from the music world. No Doubt singer Gwen Stefani and country star Blake Shelton were married in 2021, and Gwen brought children from her prior marriage to Bush frontman Gavin Rossdale. If Gwen plans to leave everything to Blake when she passes away, she may be concerned that those assets wouldn’t revert to her children when Blake eventually passes away - for example he can decide to leave everything to his family and cut Gwen’s children out.
The core challenge
This is the core challenge of estate planning for multiple households: how do you provide for your spouse while also ensuring your children are protected in future?
When you die without a will, provincial rules often do not reflect modern family realities: they often don’t account for common law spouses, and they may not provide asset distribution to spouses and children the way you would intend.
Competing Financial Needs
When you’re in a blended family, spouses, former spouses, and children may all rely on the same pool of assets, however it’s important to note that you only have a legal obligation to leave assets to a legal spouse or financially dependent children. For example the Scholastic CEO left everything to his girlfriend when he passed away, and while his ex-wife and adult children weren’t happy about it, they weren’t entitled to anything by law.
There can be a tension between supporting a current partner and inheritance planning for children, but you can easily split your estate between your spouse and children - for example 50% for your spouse, and 25% to each of your two children - but it’s important to note that your spouse can apply for more (though they may not get it).
What’s seen as “fair” may differ between a spouse and children.
Unclear Legal Obligations
If you’re separated but not divorced, you’re still deemed to be legally married in the eyes of the law, which means it’s important to have a separation agreement that clearly renounces any right to each other’s estate, otherwise an ex could stand to inherit part of your estate depending on your province.
It’s important to update wills and power of attorney documents and health directives to ensure someone you choose is appointed in key roles, and that you’re distributing your assets according to your new family structure.
Good to know
You can update your will with Willful and unlimited amount of times.
You may want to consider a prenuptial agreement or marriage contract for your blended family, which you can create online in many provinces using Jointly.
Risk of Family Conflict
Ambiguity often leads to disputes, delays, or legal challenges, so ensure you document things clearly.
For example, if a parent passes away, there can be an argument over who will handle their affairs: should it be the new spouse, or the adult children? By clearly outlining your executor choice in your will, you’re making your wishes clear.
The time to plan is now: once you’ve passed away, emotions are heightened and grief can cause disputes to escalate. By leaving a clear blueprint of your wishes, it means your family must follow your instructions, even if they aren’t happy about it.
Key Estate Planning Decisions to Make Early
It’s important to make intentional decisions before drafting legal documents, and to ask the “what if” questions:
- What if I pass away first, would my spouse ensure my children are taken care of?
- What if they pass away first, would the same be true?
While it’s easy to default to the easy choice - leave everything to my spouse; if we both pass, give it to my children - there are nuances with blended families that could warrant more detailed planning.
Who Are You Providing For—and How?
The first step is to identify who you want to provide for when you pass away.
- Do you have minor children who would need more support, or are your adult children financially independent?
- Did your spouse enter the marriage with independent means, or will they need support when you pass?
Important
While you may feel obligated to support a partner or children, remember that you only have a legal obligation to support a legal spouse and financially dependent children (for example minor children, or a financially dependent adult child).
While you may choose to pass on assets via a will, you can also use trusts and life insurance policies. For example, you might leave your investments and property to your spouse, and the proceeds of a life insurance policy to adult children.
Good to know
Not all assets are covered by your will, for example: Joint assets (bank accounts, property), and life insurance policies. Those assets would bypass the will in most provinces.
Document the reasons behind your decisions - while this may not be included in your legal documents, documenting the “why” behind your decisions can be helpful if there’s ever a question about your intentions.
How Should Assets Be Divided?
It’s important to consider age, financial independence, and existing support when appointing beneficiaries.
Consider whether you want equal distribution (for example, the same share for all adult children) vs. equitable distribution (different shares that match circumstances - for example, if you’ve given an adult child gifts while alive, you may choose for them to receive a smaller share of your estate).
These decisions may evolve as family dynamics change, or as the blended family matures: for example, what you choose in year one of a second marriage may be very different from in year 30.
Wills and Beneficiaries in Blended or Multi-Household Families
Wills and beneficiary designations are especially critical in complex family structures, especially if it’s a common-law relationship. When will planning, it’s also important to ensure all estate planning documents and designations are up to date and aligned, so ex-spouses aren’t included in key roles.
Why a Will Is Essential
If you die without a will, a government formula dictates what happens to your assets - it typically starts with a spouse, then children, then siblings, and so on. There are clear risks for blended families.
First, this default distribution formula often won’t match who you would want to receive your assets, and it often doesn’t include stepchildren or stepparents.
In many provinces, if you die without a will a common law spouse is not automatically entitled to a piece of the estate, and they would have to apply for a share - and in Quebec, they would be entitled to nothing.
When entering a blended family, you may have new intentions, but unless you document them formally, any verbal promises or assumptions are not legally binding.
Keeping Beneficiaries Up to Date
When you go through a separation, divorce, or remarriage, the people you would choose to receive your assets will likely change. It’s important to update your will to reflect those changes, which you can do for free at any time on Willful.
It’s also important to revisit any beneficiary designations on registered accounts, pensions, and life insurance policies to ensure they reflects your new blended family - for example if you’ve appointed your ex-husband as the beneficiary of a term life insurance policy and you pass away, depending on where you live he may still be entitled to receive that money even though you’re divorced.
It’s also important to plan for the “what if” scenarios - for example:
- What if you and your spouse pass away at the same time?
- Who should inherit your assets then?
Making a will in a blended family
Important
Each partner needs to make their own will: wills are like tax returns, every Canadian needs one, since you will likely pass away at a different time than your spouse.
There is a unique product called a joint will, which involves making your will together - this is used quite rarely since when one partner passes away, the other partner is not able to update the will. This is very restrictive - for example what if you get married at age 50 to your second husband, and you make a joint will saying you can’t update it when he dies. He then dies at 70, and you remarry at 75. You can’t alter your will to leave everything to your new husband.
Using Trusts to Protect Everyone Involved
While many people with blended families can use a platform like Willful to create their will, there are some instances where more advanced planning with a professional may be required.
For example, trusts are often used in blended family situations to provide for a spouse while also protecting your children’s inheritance. Willful wills create a trust to hold assets for minor beneficiaries, but a professional would be required to handle a spousal trust, or to create a life interest in an asset.
Spousal Trusts and Life Interest Trusts
Spousal trusts can support a surviving partner while preserving inheritance for children. It ensures that when you pass away, your partner can’t cut your children out of receiving their inheritance (for example, if your children are adults, your partner wouldn’t have a legal obligation to leave anything to them, and could leave everything to their children or other loved ones).
This involves leaving assets to a partner for their enjoyment while alive, and when they pass, those assets would revert to your children. The terms of the trust would need to ensure that a spouse couldn’t spend it all before they pass, since that would defeat the purpose - for example, a trust can stipulate that a spouse receives the income from the trust - for example the interest on a $1M estate - but that the children inherit the $1M principal in future; or the trust can allow them to draw a certain amount or % of the trust per year.
A spousal trust also allows you to appoint a trustee to manage the trust and any distributions to your spouse, which means that an impartial trustee can provide impartial oversight and prevent abuse.
Trusts are also often used to provide what’s called a “life interest” - for example my spouse can live in our house until they pass away or they remarry, then the house goes to my children.
There are many more nuances and controls you can discuss with a professional.
Trusts for Minor Children
If you’ve appointed your minor children or stepchildren as beneficiaries in your will, you can stipulate what age or ages they will receive their inheritance - for example you may want them to receive half at age 21, and half at age 25.
These assets would be held in trust and managed by a trustee - if you use Willful, your trustee is the person you appoint as executor; if you’d like those to be separate people, you can work with a professional.
The trustee will oversee those funds until the age or ages you’ve specified, and they would also have the authority to release funds to a guardian if there is one.
Choosing Executors and Guardians Carefully
A will isn’t just about who gets your assets, it also appoints an executor or co-executors to wrap up your estate, and assigns guardianship for minor children or pets. This can be more sensitive in a blended family: for example do you want your partner to handle your estate, or your adult children? Will either party feel left out if they aren’t appointed in this important role?
When choosing an executor, it’s important to choose someone you trust who has the capacity to take on this role, which often involves hundreds of hours of work. This isn’t a popularity contest, or about reducing the potential for hurt feelings; it’s about appointing someone who you believe will best represent you and honour your wishes when you’re gone.
Typically it’s best practice to align with your executor before you appoint them, since they can decline the role when the time comes. However, you can keep that decision private if you feel it will create contention in your blended family. The key is thoughtful, documented decision-making.
Appointing a Guardian in a Blended Family
It’s also important to appoint a guardian for minor children: what happens if you and the other biological parent aren’t able to parent? The courts prioritize legal parents, whether that’s a biological parent or a stepparent who has formally adopted their stepchild, and a will can’t override a parent with legal rights. So, it’s important to appoint a guardian especially when there are multiple households involved.
Remember
A will can’t override a parent with legal rights.
You can, however, name a stepparent as the guardian in case you and the other biological parent have passed away. It’s best practice to appoint a backup guardian in case you and your partner pass away at the same time.
You may also want to create a letter of wishes explaining more about your desired custody arrangements and preferences for ongoing care, since the family court takes your wishes into account when making guardianship decisions.
How to Communicate Your Estate Plan to Avoid Conflict
When it comes to blended families, communication can be as important as legal documentation. Discussing your estate planning wishes with your partner can make it clear that you want to ensure your children are protected even after you pass, and can ensure your children know how your spouse will be involved in estate settlement.
However, while it may be beneficial, disclosure is optional and there are many family dynamics at play. There is no legal requirement to discuss your estate planning choices with your family.
The key is ensuring someone you trust knows where to find your estate planning documents when you pass away.
When to Update Your Estate Plan
Estate planning is not a one-time task; rather it’s something you should revisit annually to ensure it’s still up to date and reflects your current life and family circumstances.
Evolving blended families require ongoing review - for example if your marital status changes, you move provinces with your new family, have another child, someone named in the will passes away, or you want to change any of the decisions in your will, you should update it.
Important
Outdated plans that don’t account for your new blended family situation can create more harm than no plan at all.
How Willful Helps Blended Families Plan Ahead
Willful helps you create a clear, legally-valid estate plan online, even if you’re part of a blended family. On Willful, you can appoint an executor, beneficiaries, and guardians for minor children and pets. You can appoint backups for each of those roles in case your chosen person is unable or unwilling to perform in that role. You can decide at which age or ages minors should receive their inheritance. And you can leave special gifts, for example heirlooms or property.
Unless you want to get personalized legal advice, or you require specialized trusts to direct assets in your blended family, Willful can likely accommodate your blended family situation; it really depends on your circumstances and how you want to plan for assets to flow to your family members.
Willful also offers free unlimited updates so you can keep your documents up to date as your blended family grows and changes.
If you’re not sure if Willful is the right fit for your blended family, our customer support team would be happy to discuss via email, live chat, or phone.
Conclusion
Planning your estate when you have a blended family requires intention, clarity, and regular review.
While there can be additional considerations for blended families, platforms like Willful are often still a good fit.
The most important part of estate planning for blended families is starting - so start today and take the first step toward a clear, up-to-date estate plan that creates peace of mind for your family in future.
