One of the most important aspects of estate planning for families is ensuring that everyone who is considered to be part of the family is able to share in the family wealth after death. While each holder of family wealth has different views on how and when this should occur, no one ever wishes to accidentally eliminate an intended heir. Unfortunately, this can happen all too easily when standard provisions routinely included in wills and trusts are not fully considered in light of each person's unique family circumstances.
Here is one example of how such an unintended disinheritance might arise. A person makes a will which provides for a cash amount for each grandchild. This person has a child who is a parent to his or her spouse's child from a previous marriage. This child never legally adopted his or her spouse's child, although this "step-grandchild" is considered part of the family.
Because the professional advisor preparing the will does not find out that this "grandchild" is really a step-grandchild and does not name him or her in the will, when the person dies, the legal definition of "grandchild", which includes only biological or legally adopted grandchildren, prevents the step-grandchild from receiving the cash amount left to grandchildren. In this example, the standard will provisions do not eliminate an heir, but are not designed to include a recognized family member without individual tailoring.
Another way an intended heir can be disinherited arises from the circumstances of his or her birth. Where a group of family members are described in the will by their relationship to the testator, for example "my children" or "my grandchildren", it is not only important to ensure that everyone who is considered to fall within this group can be described this way, as seen in the above example, but also that the standard clauses of the Will are adjusted if need be.
Most Ontario wills drafted by a lawyer include a standard clause, which is intended to ensure that a person who may be genetically related but has never been acknowledged as a child or grandchild or other relative will not inherit, or that the executor need not make any inquiries about whether such a person might exist. While some standard clauses anticipate more nuanced family dynamics, others are simpler and include a clause which specifically excludes all persons born outside of legal marriage without exception, a once common provision which is now increasingly outdated and problematic for modern families.
An example of how such a clause can end up disinheriting people who are intended to be included in the will is as follows. A person makes a will which provides for a cash amount for each grandchild. The will as drafted includes a boilerplate, outdated clause providing that persons born outside legal marriage are not to inherit. This person has a child who is living with a life partner and who has children with this common law spouse. This person has always considered all of these grandchildren to be family, but without customized provisions, the "boilerplate" exclusion clause will act to disinherit these family members from sharing in the estate.
Situations become even more complex when reproductive technology plays a part in conception. The All Families Are Equal Act (Parentage and Related Registrations Statute Law Amendments), 2016 (S.O. 2016, c. 23) came into effect in Ontario in 2017 and established new rules of parentage in Ontario to deal with the modern reality of assisted reproduction and surrogacy when it comes to who is, and who is not, a parent of a child and allows for non-biological parents without the necessity of Court intervention.
The Act also expanded the definition of "child" and "issue" in Ontario to include not only biological or adopted children and children conceived before but born after death, but also children conceived after and born within three years of a person's death, if certain conditions are met. For a further discussion of the new rules, see our previous blog. These rules apply not only to custody and financial support matters, but also to inheritance matters. If a testator's family members have used or may use reproductive technology for conception, further careful consideration of the legal definitions of "child" and standard will clauses are needed to ensure those who are intended to inherit can do so and those who are not to inherit do not.
Family relationships are more complex now than ever before as more people choose not to marry and have children within and outside of legal marriage (almost 20% of children 14 and under in Canada live with parents who are common law spouses and 1 in 10 live with a step-parent, as of the 2016 census), avail themselves of technology to conceive, and have more intricate family relationships.
All modern families have one thing in common: the ties that bind may not be biological, but they are real and meaningful. These situations require experienced professionals who, based on their understanding of each client's unique situation, can ensure that loved ones are not excluded by standard definitions or arbitrary "boilerplate" clauses.
The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.