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Blended Families, Second Marriages and Wills: Avoiding Future Litigation

Blended Families, Second Marriages and Wills Avoiding Future Litigation

Table of Contents

The landscape of Canadian estate planning is evolving. When blended families and second marriages come into play, the risk of disputes over Wills, trusts, and estates can skyrocket. At Forum Estates LLP (forumestates.ca), we believe clarity today prevents conflict tomorrow. Here’s what you need to know. 

1. Canadian Family Demographics & Reality Check

  • Rising incidence: Over the past two decades, Canada has seen a steady rise in blended families. Approximately 20–23% of couples now cohabit or remarry, bringing in children from previous relationships (cba.org)
  • Common-law vs marriage: While both married and unmarried partners now share similar rights under the Wills and Estates Act (e.g., Alberta's WESA), intestacy rules still favor legally married spouses (fasken.com)
  • Public sentiment: A 2007 study found 60–70% of people believe "spouses in common-law relationships should inherit under intestacy just like married couples" (erudit.org).

These shifts make traditional estate plans inadequate. 

  • The Law Speaks: WESA & Wills Variation Rights

In British Columbia, the Wills, Estates and Succession Act (WESA) grants courts authority to rectify unfair Wills through Section 60, ensuring provisions are “adequate, just and equitable” for spouses and children…including those from prior relationships (naepcjournal.org)

Citing Tataryn v. Tataryn Estate (1994), the Supreme Court clarified: 

“A testator must meet the legal and moral obligations owed to spouses or children” (fasken.com). 

That means a surviving spouse or disinherited child can challenge a Will if the testator’s legal duty appears unmet. 

  • The Rising Risk of Litigation in Blended Families

Blended-family estate disputes are on the rise. The Fasken paper “Wills Variation and Blended Families: The New Reality” highlights how courts now balance conflicting entitlements when spouses, stepchildren and biological children clash (fasken.com).

Trusts meant to protect children often become flashpoints: 

“Spouse trusts can become contentious… If your spouse and children are not likely to agree… this could lead to protracted arguments, and potentially, litigation.” 

Even well-meaning trust strategies—like spouse trusts or joint partner trusts—can invite disputes about maintenance, trust access, or capital use. 

2. Update on Capital Gains Tax Changes: Cancellation Preserves Estate Planning Stability

The Canadian government formally scrapped the proposed increase in the capital gains inclusion rate scheduled to go effective on June 25, 2024, in a major policy U-turn. Estate planners, trustees, and tax advisors were worried initially about the plan by increasing the inclusion rate to 66 2/3% on corporations and most trusts.

Under the repeal of this proposal, the inclusion rate is not changed and would continue to receive the current treatment of capital gains tax on testamentary and family trusts. This development offers new predictability to long-term estate planning techniques, especially to those higher wealth individuals who use trust regimes to transfer wealth or to establish fair distributions among spouses and children in a blended family. 

Although such cancellation would be welcome news, it is wise to reconsider your estate plan provisions on a regular basis as changes in tax policy discussions and changes in legislation in the future are bound to take place. 

3. Taking into Account the 21-Year Deemed Disposition Rule

The “21year deemed disposition” rule for personal trusts triggers higher taxable events every two decades. Trustees must plan to have liquidity available–or risk triggering hefty tax bills. For blended families relying on trusts to manage assets between spouses and children, this heightens urgency.

4. Smart Planning Strategies to Prevent Conflict

Here are proven estate-planning tools to minimize litigation:

  • a) Clear & Fair Will Provisions
  • Specify who receives what--e.g., “House to spouse, RRSPs to children.”
  • Consider mirror Wills for mutual agreements in second marriages.
  • Use spousal trusts or testamentary trusts to balance spouse entitlements and children's inheritance.
  • b) Use of Life Insurance
Forum Estates notes that life insurance often fills the gap between a spouse’s needs and children’s inheritance. A tax-free life-insurance payout can ensure both parties receive appropriate support.
  • c) Trust Structuring & Planning

Forum Estates notes that life insurance often fills the gap between a spouse’s needs and children’s inheritance. A tax-free life-insurance payout can ensure both parties receive appropriate support.

  • Spousal interest trusts grant spouses income rights while preserving capital for children.
  • Properly structured, these trusts avoid triggering immediate capital gains taxes and can mitigate the 21-year rule when deployed with tactical planning .
  • Consider qualified disability trusts (QDTs) or graduated rate estates (GREs) to maintain favourable tax treatment on capital gains.
  • d) Marriage & Cohabit Agreements
Especially important in second marriages, pre- or post-nuptial agreements can determine asset ownership, entitlements, and estate division—well before death.
  • e) Collaborative Law
Rather than anticipating court battles, families can use collaborative law frameworks to craft wills and estate plans together, minimizing future friction.

5. Research Insights & International Context

Research from McGill highlights how most Canadian inheritance frameworks are still built on the traditional nuclear model—and fail to accommodate blended dynamics (lawjournal.mcgill.ca). 

An Indonesian study published in 2024 also emphasized: 

“The division of inheritance… is not only a legal issue, but also reflects complex social dynamics” (researchgate.net) 

This is a global reality: as family structures evolve, so must our legal tools. 

6. Real-Life Cautionary Tale: Grewal v. Litt (BCSC, 2019)

In Grewal v. Litt, the British Columbia Supreme Court used WESA’s Section 60 to redistribute estate assets unfairly allocated by the deceased. The court noted: 

“WESA gives judges wide leeway to make drastic changes to a will to ensure a ‘just and equitable’ distribution to surviving spouse and children” (Forum Estates Experts) 

This is a lesson from this case: the testamentary intent is not bullet-proof unless the planning is obvious and fair.

7. Action Steps for Blended Families in Canada

  • 1. Update your Will ASAP

Ensure your testamentary intentions are clear, accurate, and reflect your family’s current composition.

  • 2. Engage a full family-planning team

A lawyer, tax advisor, and financial professional, together, can integrate trust structures and tax planning.

  • 3. Consider insurance solutions
Think of term or whole-life policies as backstops for children who might otherwise be sidelined by spouse trusts.
  • 4. Draft marriage/cohabitation agreements
Define property rights and estate division before conflicts arise.
  • 5. Use fixed or digital records
WESA permits electronic testamentary instruments, which can provide clarity and avoid disputes.
Select impartial, ideally professional fiduciaries who can navigate blended-family tensions.

8. Final Thought: Avoid the “Laughing Heir” Dilemma

Canada’s intestacy laws aim to avoid the “laughing heir”–distant relatives who benefit because closer ones were excluded. But in blended contexts, the heartache lies closer to home. Parents, spouses, and children, those who share love or obligation, must trust the plan will respect relationships, not court room strategies.

9. Why Forum Estates LLP Is Here for You

At Forum Estates LLP, we specialize in articulating and protecting complex family intentions through:
  • Seasoned Will drafting with trust provisions
  • Strategic use of testamentary trusts and life insurance
  • Tax-smart planning for capital gains, trusts, and estates
  • Drafting cohabitation and marital agreements
  • Guidance on collaborative law options
  • Word from our team:

“Estate planning isn’t just legal–it’s deeply personal. We craft solutions that withstand legal scrutiny and honour family bonds.”

Conclusion

Blended families and second marriages require far more than generic estate plans. They demand strategic foresight in tax planning, trust creation, and clear legal documentation. With rising tax and legal mechanisms like WESA’s Section 60, you need a vision that’s both compassionate and conflict-proof.

Don’t wait for tragedy or discord. Reach out to Forum Estates LLP via forumestates.ca for a comprehensive, bespoke estate strategy designed to protect your family—today, tomorrow, and beyond.