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A will needs to reflect blended families

Nowadays, second marriages are not uncommon. This brings us blended families and changes may occur in your estate plan because of this. Generally, a person who is writing a will when a second or third marriage takes place will do his or her best to create a balanced picture. This person tries to appease his or her new spouse while continuing to protect and advance his or her kids from a prior marriage.

The dynamics of the family will be an important aspect of any estate plan that is in place or being revised. While you are alive, the glue that holds the family together may be you. When you pass away, there could be contention and strife. How will you respond to this revelation?

Putting an effective estate plan in place now can save so much infighting later. Being honest with your lawyer about the relationship with your current spouse and the kids from a previous marriage is key. One idea that arises is to have life insurance that is paid to the children, while the spouse retains the assets of the estate in a spousal trust.

A spousal trust is a tool that lets the surviving spouse use assets that you leave behind during his or her life, and, upon his or her death, the assets belong to your children. There are some tax benefits to having your estate set up this way, so discussing it with a lawyer can be a good idea.

There is a "rollover treatment" that allows assets to be transferred from the estate to the spousal trust at the same value they were at when the testator acquired them. Changes to Canada's Income Tax Act are coming in January 2016 and will make it possible for the surviving spouse to be responsible for any capital gains taxes instead of the estate.

Source: Huffington Post Canada, "If You're in a Second Marriage, You May Need to Revisit Estate Planning," Suzana Popovic-Montag and Ian M. Hull, accessed Oct. 20, 2015

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