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

Longer lives means more complex estate plans for women

Longer life expectancies give female spouses more reasons to get their estate plans in order, Toronto trusts and estates lawyer Patrick J. Aulis tells AdvocateDaily.com.

Aulis, founder of Aulis Law Firm Professional Corporation, and North York Mediation, says he advises all spouses about the need for an effective estate plan.

However, the practical reality of life expectancies means it’s more often a female spouse that is left to deal with the more complicated transfer of assets.  

Aulis explains that when a spouse outlives his or her partner, the transfer of assets generally occurs smoothly and without serious tax consequences, often via the right of survivorship on accounts held jointly.   

“It’s a simple administration when the first spouse dies — usually the man — and it all goes to his wife,” he says.

However, the death of the second spouse usually precipitates a more complex transfer of assets to the next generation.

“This is where the tax liabilities hit, which must be accounted for,” says Aulis, noting that beneficiaries will have to deal with capital gains on assets such as the family cottage, and deferred income tax obligations associated with RRSP funds.  

One common problem occurs when the testator has multiple children and specifically bequests the family home to one of them. If the property still has a mortgage, that liability is assumed by the estate, potentially affecting the entitlement of the other beneficiaries who didn't get the house, he says.

“There can be tax mismatches if you’re not careful,” Aulis says.    

Spouses who outlive their partners should also consider updating their power of attorney arrangements, he says, since many married couples will appoint each other as the person to handle their financial affairs and make medical decisions should they become incapable.   

In his years in practice, Aulis has noticed his female clients tend to be particularly concerned about the guardianship of their minor children, or grandchildren, in the event of their passing.

Many of his older female clients also tend to be unaware of the details of any estate plan that's in place, having delegated financial matters to their husbands according to traditional gender roles. However, Aulis says that is changing as societal shifts work their way through his clientele.

“Things are different in younger generations, and many women are breadwinners in families,” he says. “Either way, it’s critical that people find out whether they have an estate plan in place, and if so, what it is. Don’t assume it’s been handled by someone else and addresses your needs.”

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