Can you guard against your life savings ending up in the hands of someone else’s children?
I posed that question last week, after telling a story about how plausible future events could lead to that negative outcome.
The problem arises with the very common scenario of blended families.
Two people fall in love and make a life together. Each has children from previous relationships.
They work hard, together, to save for their retirement.
When in their mid-fifties, they make wills that mirror each other. Each will says that when one of them dies, everything goes to the other so that they can live the rest of their life in comfort. And that when the second of them dies, everything is split between the children.
What they fail to consider is what might happen in the time that will pass between their two deaths. If one of them dies at age 60, the other might live another 40 years.
Forty years is lots of time for a potential deterioration in the relationship between the surviving spouse and their stepchildren.
And lots of time for the surviving spouse to find love again.
The surviving spouse reviews their will.
They no longer want their stepchildren to get an equal share of their estate. They might want to cut them out altogether.
And they’ve become financially entwined with a new life partner. It makes sense for each of them to make wills leaving everything to each other.
As a result, the stepchildren might end up with nothing of the life savings amassed by their parent, the deceased spouse.
There’s no perfect solution, but there are options.
One is to make an agreement with your spouse where each of you agree that you will not revoke your will after the other of you dies.
The terminology for this is making “mutual wills”.
To have legal effect, that agreement must be clear. Terms of that agreement can be made within your wills themselves, contained within a separate written contract or both.
That might sound like a perfect solution. But perfect solutions are illusive when trying to plan for an uncertain future.
All sorts of future events could occur where having the surviving spouse handcuffed to a mutual will made years before would result in gross unfairness.
Unfortunately, the only person who could have removed those handcuffs, the other deceased spouse, is not here to do so.
Put yourself in the shoes of the surviving spouse. You have no children of your own and the mutual will you are handcuffed to leaves everything to your two stepchildren.
Rightly so, it seemed at the time. Your assets came about with the help of your deceased spouse.
But you are in your mid-30s when your much-older spouse passes away. You are lucky enough to find another life partner and have three children together.
Fast forward to when you’re in your 50s. Your stepchildren, who had been put through extensive university programs, are independently wealthy.
You have no intention of disinheriting your stepchildren, but you want to ensure that your biological children receive your support on your death as well. Your deceased spouse, if alive, would want that too!
But you can’t change your will.
Another example is your ability to amass significant additional assets after your spouse passes away.
Your estate at the time you handcuffed yourself to a mutual will was relatively small. Now it’s much more significant.
You would like to change your will to leave parts of your estate to others, while still providing for your stepchildren, but the handcuffs get in the way.
The younger you are when making wills, the more likely there will be a scenario where mutual wills end up being inappropriate.
As you and your spouse age, that likelihood goes down because the potential amount of time between each of your deaths becomes less and less.
But ironically, the more you and your spouse grow old together, the value of mutual wills goes down as well!
Next week I will describe other ways that you can ensure that your children benefit from your hard-earned assets. I’ll warn you now, though, that none of them are perfect.
Paul Hergott
Lawyer Paul Hergott began writing as a columnist in January 2007. Achieving Justice, based on Paul’s personal injury practice at the time, focused on injury claims and road safety. It was published weekly for 13 ½ years until July 2020, when his busy legal practice no longer left time for writing.
Paul was able to pick up writing again in January 2024, After transitioning his practice to estate administration and management.
Paul’s intention is to write primarily about end of life and estate related matters, but he is very easily distracted by other topics.
You are encouraged to contact Paul directly at paul@hlaw.ca with legal questions and issues you would like him to write about.