It’s summer and everyone gets invited to a wedding.

Did you know that a marriage revokes all wills? There are exceptions for those wills expressly made in contemplation of marriage to a new spouse.

In a Second Marriage

Marriage creates new property, support and tax rights for your new spouse. These can trump any other person’s rights.

You must use a marriage contract if you wish to modify these statutory rights. You cannot just gift all your assets away and think they cannot be attacked by your new spouse in a lawsuit.

Marriage contracts are expensive. They take months to prepare. Unless there is a substantial disparity of wealth, you may not want to consider one.

Not Getting Married?

People think living together is not as difficult as if you got married. Well, common-law spouses have benefits under income tax and pension laws. Common-law spouses do not have automatic rights to support or property.

Take Paul who resided with Jane for 15 years. They each shared all house payments, but the house was in Jane’s name alone.

Jane died without a will. What happens to Paul? 15 years or 35 years together still does not give Paul a share in the house unless he is on title, or the house is given to him in Jane’s will.

Paul must hire a lawyer and sue Jane’s estate as a common-law spouse to claim an interest in the property. It can take 3-5 years to resolve such disputes.

Does Living Together Affect Your Assets?

In Ontario, common-law spouses have support rights if a child is born or if partners have lived together in a conjugal relationship for more than three years.

Cohabitation agreements are not commonly prepared. They are expensive and require each partner to have an independent lawyer. They can help, however, if the agreement is up to date.

Most contracts can become out of date in 5 years. The agreement must address any changes. For example, the agreement must reflect circumstances where a partner quits working because of the birth of a child or health issues.

How Do Relationships Change Estate Planning?

Whenever there is a change in your relationships, you must revise your estate plan.

With a marriage, you will need to revise wills, designated beneficiaries on RRSPs, life insurance, tax-free accounts, and pension, drug and health plans.

Any change in a relationship can also mean you must change your executors, estate trustees and have new namesfor attorneys and guardians for children.

To learn how marriage affects your estate planning, read Estate to the Heart: How to Plan Wills and Estates for Your Loved Ones.

Start By Creating an Inventory of What You Own

You can do this by drawing a circle on a piece of paper. Everything you own fits into this circle. I call this your estate pie.

The three slices in your estate pie are your Will Assets, your Joint Assets, and your Designated Assets. Your estate can be worth thousands or millions of dollars.

Regardless of what you own, trust me: It all fits into this pie.

The more valuable your pie, the more you will need professional help to get started.

You need to understand how each type of asset is treated differently before you make a will and estate plan.

My free ebook, Estate Planning: 7 Keys to Success will explain this in an easy-to-read language. Get a copy at EstateTherapy.com.

Hot summer days bring back memories of the sun and the family swimming at the beach.

And when your family packs up for a summer trip, their safety is always your concern.

You can protect your family with this quick estate planning review in a matter of minutes.

I call it 3-D Estate Planning Review. It goes like this:

Before you fly away or finish packing the car, take a moment to answer these 3 questions.

1. If one of us does not come back, what happens to our family?
2. Who will be in charge?
3. Where will they find important papers?

As a parent, it’s your job to protect your minor children.

You need a will to name guardians for them and provide for their needs.

Sure, you have done that but before you leave for summer vacation, run through this 3-D Estate Planning Review.

The First D is for “Deeds to Property”

• Are your ownership deeds in order showing the proper owners?
• Who will inherit your home, vacation or business properties?
• Can anyone find the deeds, mortgage and insurance papers?

The Second D is for “Documents”

• Where are your original signed wills and powers of attorney?
• Does your executor/attorney know where to find them?
• Do executors/attorneys know a good estate lawyer in an emergency?
• Should you revise these documents before your holiday?

The Third D is for “Designations”

• Do you have designated beneficiaries on your pension, life insurance, RSPs, RIFs, and TFSAs?
• Have you considered all tax rollovers to spouses and charities?
• Do you have enough life insurance designated to cover your family?

What if you are single, or you and your spouse do not return from vacation?

Use the same 3-D approach. Whatever you do, get professional advice.

You can often get reassurance that everything is in order by calling the lawyer who prepared your estate plan and will.

What’s that you say?  You created your will online without a lawyer?

Uh-oh. You have no one to turn to for advice and reassurance.

It’s not too late to get things done.

Contact me for an appointment or call 416.769.9800.

Tell me when you have to leave for holidays. I can help put an estate plan in place.

You can have wills and powers of attorney prepared by a Certified Specialist in Estates and Trusts law.

Stop losing sleep. Contact my office today for an appointment, and see my schedule of services and fees.

Get tips for your own estate planning to-do list this Sunday, June 5, 2011, 9 a.m. – 10 a.m. EST.

Tune in to Zoomer Radio AM 740. Join me on Right on the Money with host, Wayne Baxter, CFP, of Investment Planning Counsel.

We will discuss what you need to do now as you plan your estate. You can call in and have your estate planning questions answered.

Can’t make the show? Email me your estate planning questions and I’ll answer them in upcoming posts.

Listen in this-coming Sunday.

Tune in to Zoomer Radio AM740 on Sunday, May 8, 2011, 9 a.m. – 10 a.m. EST and join me, on Right on the Money with host, Wayne Baxter, CFP, of Investment Planning Counsel. I will discuss basic tips and tricks on growing your estate.

Learn how it works this-coming Sunday.

Tune in to Zoomer Radio AM740 on Sunday, April 10, 2011, 9 a.m. – 10 a.m. EST and join me, on Right on the Money with host, Wayne Baxter, CFP, of Investment Planning Counsel. I will discuss the tax mistakes people make when planning estates, tax tips for estate executors, and more.

Learn what you can do to protect your family.

Did your will give any property or support to your common-law spouse?

You can expect lawyers to challenge your estate plan if that amount is inadequate.

That’s the point I made during a recent call-in program on Wayne Baxter’s Right On the Money show for Zoomer radio, on February 27th.

Any time there is a court challenge, you can expect it will cost tens of thousands of dollars.

Revise Your Will or Pay More Later

Many estate cases with common-law spouses drag on for 5-6 years. They can cost clients $50,000. These costs must often be paid by the estate. When you add up the costs, you can see them double or triple if there are other players involved.  

You will find the Kerr v. Baranow case has a lengthy examination of the law of unjust enrichment.

Register and I will send you an email notifying you of any new posts.

In the coming weeks, I will give you tips on what the Kerr decision means if you are an estate executor, a common-law spouse who must sue an estate, or if you are doing any estate planning.

You can also check my blog at EstateTherapy.com where I will be giving estate advisors some examples of unjust enrichment claims.

The old rules for common-law spouses no longer apply for estate planning. 

You may have not worried about mentioning your common-law spouse in your will.

Your lawyer may have told you it was safer not to give your common-law partner anything. You may have even tried to cut your common-law partner out of your will by leaving all your money to your relatives.

Well, that could be a costly mistake.

Common-law spouses, the Supreme Court of Canada says, can successfully sue your estate on the basis of unjust enrichment and constructive trust.

While this has always been the case, the Kerr v Baranow case has said it is more than looking at the exchange of benefits.

The courts must consider if there was a joint family venture. To be continued…

Canada’s Supreme Court has issued a wake-up call for common-law spouses.

The law has changed based on decisions released February 2011.

If you are a common-law spouse, you may not realize it but you have no legislative rights to inherit property in Ontario.

In Kerr v. Baranow, the Supreme Court of Canada clarified how claims can be made by common-law spouses.

In the next few weeks, I will be writing about how this is a game changer for many readers.

The case affects you if you are: 

• an executor dealing with claims from a common-law spouse
• a common-law spouse left without a proper share of an estate
• making a claim against an estate for support
• doing your will and estate planning involving a common-law spouse

I will point out the common dangers you can avoid when you are making a will. You may need to revise your own estate planning to prevent costly disasters. 

Let’s start with some basics.

When Is a Spouse Not a Spouse?

Married spouses have legislated rights in Ontario. The laws protect you if you have a marriage license. You have rights to share property and get support.

However, if you are a common-law spouse, in most jurisdictions, including Ontario, you do not have the same protection by legislation. The outcome is that if you wish to share property or get support, you must enforce your rights. This usually means going through the costly court system.

Common-law spouses, therefore, must ensure they are protected. Your name needs to be on the title to assets like a house, business or bank account.

What if your partner dies and leaves no will? Or has a will that gives the estate to relatives leaving you without support?

You must find the right legal advisor to sue the estate. The Kerr case lays out new ground rules.

Tip #1 Remember that your marriage automatically revokes any previous will in Ontario.

This is not the case in every jurisdiction, but if you don’t make a new will in Ontario, the government makes one for you. The government can then:

• determine who is in control of your estate property;
• determine who will inherit all your wealth; and
• ensure that you pay the maximum in taxes.

You will have no say in the matter. If you have remarried, then you need to make a new will.

Tip #2 In second marriage situations, it may be necessary for you and your spouse to retain separate lawyers.

Why?

This avoids any potential conflict of interest in the estate planning. It also ensures you receive independent legal advice. This is crucial if you have minor or dependent children that need protection and long-term support needs or if there is an age or wealth disparity.

Tip #3 Estate planning in 2nd marriages is basically the same old game but with new rules.

You need to educate yourself.

• Take steps to make sure that you’ve properly designated beneficiaries on all your assets, insurance, pensions, RRSPs and RIFs.
• Understand when to jointly own property with a new spouse and what should be included in your will.
• Find out if you need a marriage contract to protect specific assets such as a home business and investment portfolios.

Contact my office today for a consultation.

ALSO! Tune in to Zoomer Radio AM740 on Sunday, February 27, 2011, 9 a.m. – 10 a.m. EST and join Ed as he discusses the most pressing estate planning issues in divorce, second marriages and mixed families, on Right On the Money, with Wayne Baxter of Investment Planning Counsel.