When it rains, it pours -- and in estate planning, the greater number of parties involved, and the more complex the relationships between them, the more important it is for families to plan ahead in order to avoid surviving simply by treading water.
A 2011 Canadian census on families and living arrangements found that step-families now account for approximately one in eight families with children in Canada. This rise correlates with the progression of divorce rates, same-sex marriages, and common-law cohabitation.
The concept of the blended family covers a wide range of family types, encompassing basically all contemporary family units other than "intact" traditional families, in which all children are the biological or adopted offspring of both parents.
Beyond "simple" step-families, where all children are born of one parent prior to the current parental relationship, "complex" step-families include instances where each parent brings children from previous relationships to the new family unit, as well as when families with previous children subsequently have children of their own. This is by no means a closed list.
With the increasing prevalence of these non-traditional family units, the proliferation in rates of divorce and couples choosing to cohabit in common law relationships in lieu of formal marriage, the need for predictive, problem-oriented estate planning becomes ever more prudent.
Practitioners are well advised to expect that clients involved in non-traditional family units will often raise novel complexities regarding estate planning. It is important to canvass potential issues upfront when family members present a multitude of competing interests and expectations. A policy of immediately recognizing and confronting such potential issues is often the key to avoiding a fallout down the road.
As a result, it is important for practitioners to ask the tough questions in order to pinpoint areas of contention in blended families. This is a delicate task which should be approached with a healthy amount of tact. Issues raised by step-parent adoption, in vitro fertilization and existing support agreements from previous relationships are more readily addressed in the early stages of estate planning and, therefore, should be raised as soon as practicable.
Once a practitioner is able to isolate possible areas of future contention, the next logical step might be to schedule a family conference. While such a meeting can involve the participation of a trained mediator, it is often enough simply to advise the family members themselves to sit down and openly discuss their plans for the future, especially when a family business and succession planning are inherently tied to the estate plan. In other instances, often the simple fact that there are more hands in the same pie can lead to logical solutions and the need for more tailored financial planning.
Regardless of the circumstances, family meetings can often bring to light potential issues and misconceptions amongst family members that might otherwise have gone unnoticed and only become apparent after an estate plan is set in motion. At this point the courts, and not simply the family members themselves, may be forced to tackle the issue.
Common law couples bring different issues to the table. A common misconception is that common law partners have the same rights as legally married couples for inheritance purposes; in fact, while marriage automatically revokes a previous will, cohabitation leading to common law status does not have this same effect. While no automatic right exists for a common law spouse to raise a claim on their intestate spouse's estate, courts have allowed claims of unjust enrichment and joint family ventures to act as equitable remedies if the prerequisite circumstances are present. In lieu of these remedies, common law couples should prepare wills clearly stating their wishes in order to avoid relying on the courts to dispense equitable justice if and when the situation permits.
A final issue that especially pertains to all blended and non-traditional families is to ensure that both wills and powers of attorney are updated when family circumstances change.
As non-traditional families become more commonplace, practitioners to be aware of the myriad special circumstances which exist in contemporary family settings during estate planning and advise their clients after reflecting upon both current and prospective issues respecting the family in question.
*Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.
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