Estate planning in the 21st century.

• Author: Platten, Karen
• Position: Feature Report on Older Adults and the Law

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Welcome to estate planning in the 21st century. For most people life has become very complicated and these complications must be reflected in how assets are going to be distributed on an individual's death.

In terms of estate planning, when we talk about complications we are usually referring to second marriages, an operating business, assets in more than one jurisdiction, high net-worth, children who can't handle money, special needs children, a need for privacy, or specific charitable intentions. As every situation is different, you may have other special circumstances, which you should discuss with a lawyer who specializes in estate matters.

To begin, the situation that I see the most often is second marriage, usually with children from a first marriage for whom the individual wants to provide. Most people in this situation are torn between providing enough for their spouse and also providing something for their children at the time that they die. Many solutions to this problem exist and it is the individual who will have to determine what is right in their circumstance. For example, a dollar amount can be left for each of the children, and the remaining assets can be put into a trust for the surviving spouse for their lifetime. This is generally coupled with a beneficiary designation to the spouse of all RSP's and RIF's and pension benefits as they can roll to the surviving spouse tax-free. To accommodate this it may be necessary to maintain insurance to accommodate the cash gifts to the children. At the death of the surviving spouse, any assets left in the spousal trust can then be divided amongst the children or their children.

There are some concerns with this form of estate plan in that a spouse has the ability to bring an application under the Dependant's Relief Act of Alberta if they do not receive the entire estate. The court then considers if they have received enough to maintain the lifestyle that they enjoyed while their spouse was alive. Of course, this must be overlaid with any assets that the surviving spouse had on their own as well as any pre-nuptial agreement they may have entered respecting the marriage.

As well, the spouse may feel that the children are watching each penny that goes to the spouse and thinking that he or she is spending their inheritance. This can also be incorporated into the spousal trust where limits on capital encroachments can be set or it can be made clear that the trust is...