Michael Ford (post until Oct. 31/19)
Estates & Wills & Trusts

Triggers to update your will: family changes

This is Part 2 of a three-part series where Toronto wills and estates lawyer Mary Wahbi talks about the life events that should trigger a review of your will. In this instalment, she explores changes in family life situations that should spur you to update your will.

One of the most important times to update estate planning is when there has been a change in family life or relationships, says Toronto estates lawyer Mary Wahbi.

Marriage, divorce, separation, births, deaths, adoptions — all these major life events call out for a review of your will, says Wahbi, a partner with Fogler Rubinoff LLP.

In Ontario (but not all provinces), getting married automatically revokes any will you had before, so a revisit is essential, Wahbi tells AdvocateDaily.com.

“If it’s revoked, you will die without a will. You need to at least consider, ‘Should I republish it by a codicil in contemplation of my marriage?’ That will ensure it’s valid after the marriage.“

Marital separation, on the other hand, leaves all documents untouched, and most separating couples are not content to leave it that way.

“They don’t really want their ex-spouse to have a power of attorney,” Wahbi says. “People often scramble when they first separate, and do a really quick thing — just take their ex out of the will — and that’s not really the best way to do it.”

Redrafting a will after separation needs to be done carefully, she says, because usually, the parties are negotiating a separation agreement at the same time, and this is a contract that overrides a will.

“I try to do it collaboratively with the family lawyer to make sure the will doesn’t go sideways — then it’s not really worth anything because the contract binds the estate generally and if your will provides for something else you’re going to mess up your estate administration.”

Divorce has an immediate effect on your will: “If you divorce, your spouse is deemed to predecease you on reading your will. But it doesn’t do that for everything, so it’s important to revisit,” Wahbi says. "If an ex-spouse is named as a beneficiary of a life insurance policy, for example, that beneficiary designation is still in place and is not overridden by the general provisions of a will.  A new designation is necessary."

The persons named in your will to have custody of your children if you die may no longer be appropriate, either because they are no longer a good fit or because your children have grown, Wahbi says.

“They may be at a certain age where they don’t need custodians anymore. Or your parents are much older now and they can’t manage it, it wouldn’t be fair to them. Or your siblings have moved out of the country. Or your friends are not as close anymore — all those mothers you had play dates with when they were kids have moved away, or they’ve gone off the deep end and they’re doing crazy things, and you don’t want them raising your kids.”

Your children may now be old enough to become the executors of your will and receive gifts outright instead of in a trust.

If you want to change executors or custody of your children within your will, this only requires a codicil rather than a complete rewrite, Wahbi says. However, if the will gets to the point of having three or four codicils attached it’s better to do a full makeover to avoid any confusion.

Another life event that might change your thought process in making a new will is the marriage of a child, says Wahbi. “You might think ‘should I prepare for grandchildren?’ Or if you like the spouse you might want to give them something.“

Typically, wills don’t make any provision for the child’s spouse. “It goes children, grandchildren and the child's spouse is left out.” But you may want to add the spouse or, conversely, if you dislike them, change the way you leave assets to your child to ensure the spouse will not have access to them if the marriage breaks down.

“It sounds terrible, but you might think, I want to set up a trust now because I don’t think the marriage is going to last and I’d like to protect my child’s interests,” Wahbi says.

She cites clients who were the parents of a daughter whose husband they did not trust. “They didn’t think the marriage would last, and they didn’t think she was very good with money, so what they did in their wills was they said her share is going to be held in trust and it’ll be invested until she is 65. She’ll receive the income every year and the capital at age 65.”

Occasionally, adult children will ask their parents to skip a generation in their will and leave their assets directly to grandchildren, Wahbi says.

She is drafting a will right now for people who have four children, one of whom has done very well and does not need the money or the extra tax burden of more income-producing assets, but wants it to go directly to their kids.

“Everybody is unique,” Wahbi points out. “People say to me all the time, ‘Oh, I have a really simple situation; my family’s simple.’ But then when we get into it, and no, it is not!” 

Stay tuned for Part 3 in this series where Wahbi will address changes in estate and tax laws that should trigger an update in your will.

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