- The core problem is timing: providing for a spouse for life while preserving capital for children.
- Leaving everything outright to a spouse relies entirely on trust and their unchanged intentions.
- A spousal trust separates the income interest from the eventual capital.
- Beneficiary designations and joint ownership frequently defeat a carefully drafted will.
Why this is genuinely hard
In a first marriage the usual plan, everything to the spouse, then to the children, works because the children are the same people on both sides.
In a blended family they are not. The people the deceased wants to support during the spouse’s lifetime and the people they want to receive the capital afterwards are different, and their interests are in direct conflict.
This is a structural problem, not a family failing, and it needs a structural answer.
What goes wrong with the simple approach
Leaving everything outright to the surviving spouse, trusting them to provide for the children later, is common and fragile. Once the spouse owns the assets, they can do as they like: make a new will, remarry, or spend the capital.
None of that requires bad faith. A surviving spouse who remarries and makes a new will in favour of their new family has done nothing wrong. The first spouse’s children simply receive nothing.
The other common approach, leaving everything to the children and nothing to the spouse, creates its own exposure, since a surviving married spouse may elect for an equalisation payment under family law, and a dependant support claim may follow.
Spousal trusts
The standard structure is a trust: the surviving spouse receives the income, and in defined circumstances access to capital, for life; on their death the remaining capital passes to the deceased’s children.
This separates the two interests cleanly. The spouse is provided for; the capital is preserved.
A properly structured spousal trust can also defer capital gains that would otherwise be triggered at death, which is a substantial practical advantage.
The tensions to think through in drafting: how much capital encroachment the trustee may permit, who the trustee is, and what happens if the spouse remarries. Naming a child of the first marriage as sole trustee over a trust benefiting the second spouse is a reliable source of conflict.
The life interest in the home
A common variation gives the surviving spouse the right to occupy the home for life or until they choose to leave, with the property passing to the children afterwards.
It works, but the details need attention: who pays taxes, insurance, utilities and maintenance; who pays for major repairs; whether the spouse may sell and move the interest to a new property; and what happens if the spouse needs long-term care.
Vague drafting here produces litigation with predictable regularity.
Designations and joint ownership
This is where the best-drafted plan most often fails.
Registered plans and insurance pass to the named beneficiary regardless of the will. Property held jointly passes to the survivor regardless of the will.
So a will leaving the estate in trust for the children can be almost entirely defeated by a home held jointly with the second spouse and RRSPs naming them as beneficiary, leaving very little in the estate the will governs.
The whole picture has to be reviewed together. Reviewing the will alone is not estate planning.
Marriage contracts and communication
A marriage contract entered into before or during a second marriage can address property rights and, within limits, expectations on death. It makes the plan considerably more robust.
The other tool is unfashionable but effective: telling people. A great deal of estate litigation between a surviving spouse and adult stepchildren is driven by surprise and the suspicion that accompanies it. Explaining the structure in advance does not guarantee agreement, but it removes the shock.
Common questions
Can I simply leave everything to my spouse and trust them?
You can, and it may be right for your family. But it is a decision to rely on trust rather than structure, and it should be made knowingly.
Will a spousal trust cause a tax problem?
A properly structured spousal trust can defer capital gains to the surviving spouse’s death. The requirements are technical and the terms must be drafted to meet them.
Can my spouse claim against the estate despite my will?
A surviving married spouse may have an election under family law, and dependant support claims are possible. This is why an unbalanced plan is not necessarily a safe plan.
Do we each need our own lawyer?
Where interests may conflict, independent advice for each spouse is the safer course and makes the resulting arrangements more durable.
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