The Strategist: Estate Planning with Blended Families May 2023

BY: CLARKE WHITE, CFP®, CRPC® (USA), Financial Planner

  • Introduction
  • Non-Blended Families
  • Blended Families
  • The Big Picture
  • How Can We Help?

Estate Planning with Blended Families

A statistic you may not be familiar with is that more than one in four Canadians, of ages 35 to 64, who were in a couple relationship in 2017, were in their second or subsequent marriage or common-law relationship, according to data from Statistics Canada. With this statistic in mind, we often come across more and more blended families that include spouses in second or subsequent marriages or common-law relationships typically with children from a previous marriage. Challenges arise with unique family dynamics and can make estate planning more difficult then you may have first thought.

Non-Blended Families:

Typically, what we see with our non-blended families is fairly straightforward when it comes to estate planning. Generally, the spouses leave everything to each other with the knowledge that when the second spouse passes, everything will be left to the children. The wills and beneficiary designations on registered accounts (RRSP, RRIF, and TFSA) tend to mirror one another.

Blended Families:

With blended families, having wills and beneficiary designations that match one another is typically not the case. That is because, in most cases, a surviving spouse has no duty to leave assets to the deceased spouse’s children. Oftentimes, registered accounts and wills will name their children as beneficiary instead of the spouse. This can unintentionally cause rifts in the families with children and surviving spouses.

There are ways to protect your family, whether that be your spouse or your children. In the most flexible form, that is ensuring assets are set up properly (joint with rights of survivorship (JWROS)) or they are named as beneficiaries on registered accounts. Furthermore, having a marriage contract that could state intended wishes can go a long way towards ensuring both your spouse and children are looked after. For more complex cases, the use of a spousal trust could be set up, which would provide the benefit to your spouse until their death, with the assets passing to the kids afterwards.

The Big Picture:

A key to estate planning is understanding the big picture. If you’ve worked with Chris Raper for many years, you’ve likely heard them refer to the big picture before. First, we aim to understand the three types of capital that can be passed from one generation to the next.

  1. Financial Capital – money, land, real estate
  2. Character Capital – who your children/grandchildren are, their integrity
  3. Intellectual Capital – what your children/grandchildren know, their skills

In most cases, after the death of a loved one, the main focus is on financial capital but no consideration is given to the character or intellectual capital. When we discuss estate planning, we often look to legacy and passing financial capital from generation to generation. However, without considering character and intellect, the financial capital could be destroyed.

How Can We Help?

By understanding the important aspects of your life, your do, have and legacy aspirations, drafting and developing Your 360° Wealth Strategy – which takes an in depth look at cash flow, taxes, estate and insurance needs – allows you to properly set up and ensure your estate plan is in order. Additionally, with the creation of our Bubbles Estate Planning tool, we can illustrate your major financial assets and the impact of where they are going to go.

Another aspect is ensuring that all participants are brought into the process, which especially holds true in blended families, and understand that all progress starts with the truth, which goes a long way towards helping to carry out your estate planning objectives.

Aspira Wealth can help you navigate these tough conversations, lay out a plan and get on track for your estate planning needs. As always, your legal professional’s counsel should be sought when considering your estate plan. For more information related to financial or estate planning, please contact Clarke White or Your Aspira Team.

Clarke White, CFP®, CRPC® (USA)

Financial Planner

RJL Quarterly Reminder - Upcoming Holiday Closures

  • Victoria Day – May 22nd
  • Canada Day – July 3rd

The information contained in this report was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete and it should not be considered personal tax advice. This report is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views expressed are those of the author and not necessarily those of Raymond James. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. This provides links to other Internet sites for the convenience of users. Raymond James Ltd. is not responsible for the availability or content of these external sites, nor does Raymond James Ltd endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same Privacy Policy which Raymond James Ltd adheres to. Raymond James Ltd., Member—Canadian Investor Protection Fund. Raymond James (USA) Ltd. (RJLU) advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Raymond James (USA) Ltd. is a member of FINRA/SIPC.