A SECOND MARRIAGE: SOME THINGS TO CONSIDER
The following information and issues should at least be
considered by people who are entering a second marriage later in
life, especially where one or both of the parties has grown
children.
ESTATE CONSIDERATIONS
Generally, a Will is revoked by marriage. If one of the
spouses dies without a Will, the surviving spouse will receive a
spousal preferential share of the deceased's estate ($200,000.00
at this time) plus a large portion of the balance of the estate.
There are of course potential claims of the new spouses
against each other's estates under the provisions of the Family
Law Act (FLA) and/or the Succession Law Reform Act (SLRA). Under
the FLA, a surviving spouse can elect for a property equalization
if the Will does not provide a satisfactory legacy. The SLRA
provides for dependent's relief if the surviving spouse's support
needs are not adequately covered by the estate.
If the spouses leave all of their estate to each other, there
is nothing stopping the surviving spouse from then changing
his/her own Will to benefit only his/her heirs. One way to
alleviate this kind of disappointment of expectations of the
children of one of the spouses is to provide in the deceased`s
Will for a life estate to the surviving spouse rather than an
outright gift of the deceased's assets.
A POTENTIAL UNEXPECTED RESULT
Ontario law requires equalization of net family property on
marital breakdown (or, if elected by the surviving spouse, on
death). The net family property of each spouse is added up, and
then the wealthier spouse pays over to the other one-half of the
difference so as to result in an equalization.
In the calculation of net family property one is allowed to
deduct the value of assets brought into the marriage - with
the exception of a matrimonial home. This last exception can
result in quite a surprise for the spouse who brought into the
marriage a house, or cottage, or both, that qualifies as a
"matrimonial home" on the date of marital breakdown or
death. To avoid this issue we recommend that the new couple
acquire a new residence but, better still, that the couple enter
a marriage contract as discussed below.
A MARRIAGE CONTRACT
The best way to avoid unexpected results on death or marital
breakdown of a second marriage is for the parties to enter a
marriage contract. One of the major benefits of a marriage
contract is to establish and confirm that each party is aware of
the assets being brought into the marriage by the other. The
contract can confirm the expectations of the parties with regard
to the new marital partnership, whether it is to be a pooling of
subsequent income resources or whether they intend to maintain
separate finances throughout the marriage.
We strongly urge our clients who are going to be entering a
second marriage to enter into a marriage contract.
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