Estate planning for a blended family often involves two closely connected goals: supporting a spouse or partner and preserving an inheritance for children from previous relationships. Achieving both requires decisions about property ownership, housing, financial support, and the timing of beneficiaries’ gifts.

In Ontario, a will operates alongside family property rights, domestic agreements, beneficiary designations, and support obligations. Arrangements made separately can produce competing results. Reviewing these elements together helps families identify potential conflicts and choose an approach suited to their relationships, resources, and priorities.

1. Understand How Marriage and Common-Law Status Affect Estate Rights

Ontario gives married spouses and common-law partners different property and inheritance rights. Married spouses may qualify for an equalization payment under the Family Law Act. Common-law partners generally rely on ownership interests, contractual arrangements, and available legal claims to protect property.

The distinction also matters when someone dies without a valid will. An eligible married spouse receives the entire intestate estate where the deceased leaves no surviving descendants. Where descendants survive, the spouse’s entitlement involves a preferential share and, if sufficient assets remain, a statutory portion of the balance. Certain separated spouses are excluded under the legislation. For deaths on or after March 1, 2021, Ontario’s preferential share is $350,000, payable from the estate’s net value.

Common-law partners have no automatic inheritance entitlement under Ontario’s intestacy rules. Their protection may come through a will, valid survivorship arrangements, beneficiary designations, pension benefits, agreements, or legal claims.

2. Account for a Married Spouse’s Equalization Election

A surviving married spouse generally chooses between receiving their entitlement under the deceased’s will or intestacy and claiming equalization of net family property. The election ordinarily needs to be filed within six months after death, although court relief may be available.

An equalization entitlement on death arises where the deceased’s net family property exceeds the survivor’s. Net family property is a statutory calculation involving assets, debts, deductions, and exclusions. Comparing account balances alone can produce a misleading assessment. An election generally displaces the survivor’s will gifts, although a will can expressly provide for gifts in addition to equalization. The legislation also establishes priorities affecting payment.

For blended families, this means a proposed distribution to children should be assessed alongside the surviving spouse’s potential entitlement. An estate containing substantial real estate or business interests may also need a liquidity plan to meet obligations without an unnecessarily disruptive sale.

3. Decide Who Can Remain in the Matrimonial Home

Housing arrangements deserve particular attention where one spouse owns the home and intends to leave it to children. Section 26(2) of the Family Law Act gives a surviving married spouse who has no interest in the matrimonial home, and occupied it when the other spouse died, rent-free possession against the estate for 60 days.

Section 26(1) addresses another potential complication: a matrimonial home owned jointly by the deceased and a third person, without the other spouse. In those circumstances, the joint tenancy is deemed severed immediately before death.

Longer-term occupancy should be addressed expressly. A will might grant a life interest or a right to occupy the property on defined terms. Useful drafting questions include:

• Who pays taxes, insurance, utilities, and repairs?
• What happens if the surviving partner moves permanently into care?
• Can the property be sold and replacement accommodation purchased?
• When does the occupancy right end?

Clear answers can reduce uncertainty for the occupant and the eventual beneficiaries.

4. Consider What Happens After the First Spouse Dies

Couples sometimes make mirror wills, leaving their estates to each other, followed by gifts to their children after the survivor’s death. Where the survivor receives assets outright and has no binding obligation restricting their choices, they can generally change their will. Their circumstances may also change due to remarriage, illness, financial losses, or a change in their relationship with particular beneficiaries.

A separate, enforceable mutual wills agreement can restrict the survivor’s freedom according to its terms. Establishing such an agreement requires evidence of a binding commitment that goes beyond merely matching testamentary intentions.

Couples should consider the flexibility they want the survivor to retain. A trust, an immediate gift to children, life insurance, or a mutual wills agreement may serve different objectives. The appropriate combination depends on the family’s needs and available assets.

5. Assess Whether a Spousal Trust Fits the Family’s Needs

A testamentary trust can provide benefits to a surviving spouse or partner while directing the remaining property to children after that person’s death. For example, a trust might provide investment income to the survivor and permit capital payments for specified purposes. The children would receive whatever remains when the trust ends. The permitted use of capital deserves careful consideration because substantial payments can reduce the eventual inheritance.

A qualifying testamentary spouse or common-law partner trust may receive capital property on a tax-deferred basis under subsection 70(6) of the federal Income Tax Act. Conditions address lifetime income entitlement, permitted access to income and capital, Canadian residency, and the timing and certainty of the property’s vesting.

Generally, vesting needs to occur within 36 months after the taxpayer’s death, subject to permitted extensions, and before the beneficiary spouse or partner dies. Federal rules determine common-law eligibility. Tax advice should address both the proposed transactions and the trust wording. Selling assets before transferring property to the trust can affect the availability of the rollover.

6. Identify Potential Dependant Support Claims

Part V of Ontario’s Succession Law Reform Act allows a court to order provision for qualifying dependants where the deceased made inadequate arrangements for their proper support. Eligibility for a dependant support claim generally requires a specified family relationship and either actual support from the deceased or a legal entitlement to support immediately before death. The legislation extends to qualifying common-law partners and former married spouses. Its extended definition of child includes grandchildren and people the deceased demonstrated a settled intention to treat as children of their family.

An adult child’s circumstances require individual assessment. Financially independent adult children who fall outside the statutory dependant definition cannot obtain an inheritance solely by asserting a parental moral obligation.

Planning should therefore begin with the family’s actual support arrangements: who receives help, what expenses are paid, which obligations continue, and how those needs could be met after death.

7. Review Joint Ownership and Beneficiary Designations Together

Adding an adult child to a bank account can have consequences beyond administrative convenience. In Pecore v. Pecore, the Supreme Court of Canada confirmed a presumption of resulting trust for gratuitous transfers from a parent to an adult child. Evidence establishing the parent’s intention can rebut that presumption. Depending on the circumstances, the survivor may hold funds for the estate or receive a beneficial survivorship gift. Record the purpose of a proposed arrangement before making the transfer. Consider who should control the property during life and who should benefit after death.

Beneficiary designations also require coordination. Section 72 of the Succession Law Reform Act can make specified assets passing outside the ordinary estate available to satisfy dependant support orders. Its reach includes certain joint assets, insurance proceeds, and designated plan benefits, subject to statutory conditions and limits.

The applicant bears the burden of establishing the deceased’s ownership of the relevant funds or property. Contribution limits and protected creditor rights also matter.

8. Coordinate Domestic Agreements, Support Obligations, and Insurance

Marriage contracts and cohabitation agreements can clarify ownership, property entitlements, and support arrangements. Their terms should be reviewed alongside the proposed will.

There are statutory limits. A marriage contract provision restricting Part II matrimonial home rights is unenforceable. Courts can also award dependant support despite an agreement or waiver, although an agreement remains relevant to the assessment. 

Earlier separation agreements and court orders warrant particular attention when reviewing insurance. In Moore v. Sweet, the Supreme Court of Canada imposed a constructive trust over insurance proceeds in favour of a former spouse who had paid premiums under an earlier agreement, despite another person’s irrevocable beneficiary designation.

Insurance can help provide liquidity and separate benefits for different family members. Its ownership, designations, and purpose should reflect existing obligations and the broader estate plan.

9. Choose Suitable Trustees and Keep the Plan Current

Selecting an estate trustee or continuing trustee involves practical judgment. Consider the person’s financial skills, availability, impartiality, and ability to communicate with beneficiaries. Family members, trusted advisers, and professional trustees each bring different strengths and costs.

A useful review should bring together:

• Wills, trusts, and domestic agreements
• Property titles and joint account records
• Registered account and insurance designations
• Existing support obligations
• Expected taxes, debts, and administration expenses
• Instructions for housing and capital payments
• Estate trustee and replacement appointments

Revisit these arrangements after a marriage, separation, death, significant asset purchase, or substantial change in a family member’s needs.

For a blended family, a useful estate plan translates intentions into workable instructions: how the survivor will be supported, what children are intended to receive, and how the people administering the estate should make those arrangements function.

NULaw: Toronto Estate Planning for Blended Families

Providing for a spouse or partner while preserving an inheritance for children requires a coordinated estate plan. NULaw assists blended families with wills, trusts, estate administration, and related family law considerations. Serving clients in Toronto and throughout Ontario, the firm helps address inheritance goals, property arrangements, and support obligations. To discuss estate planning for your blended family, contact NULaw online or call 416-481-5604.