This column continues last month’s review of the new Alberta Wills and Succession Act (WSA) and its effect on estate planning in Medicine Hat.
A person can distribute their property in their Will as they wish. If, however, the property is not all going to their surviving spouse two important pieces of legislation are considered:
1) The Matrimonial Property Act (MPA) – presently, if the couple are living separate and apart at the date of death, the surviving spouse can bring an MPA claim to divide the couple’s property before the Will is considered.
2) Family Maintenance and Support claim (FMS) – allows the Court to give the surviving spouse a greater share of the estate if the surviving spouse has not received proper maintenance and support.
Different rules apply depending on the state of the marriage. If happily married the surviving spouse does not have an MPA claim. If separated the surviving spouse does have an MPA claim.
The WSA and amendments to the MPA resolves the discrepancy. Death will trigger an MPA claim regardless of the matrimonial status of the couple. These changes will apply retroactively to all Wills regardless of when drafted. This has the potential of creating problems, especially in Wills of blended families (families having step children). In these Wills gifts are made to the surviving spouse and to children from the first relationship. The MPA claims must be considered first which could allocate property to the surviving spouse. The spouse will then receive the gift set out in the Will resulting in unintended consequences.
Let’s look at a common blended family estate plan. Assume the deceased’s Will leaves 50% of their estate to the surviving spouse and 50% to their children from the first marriage. Prior to the WSA (assuming the couple was happily married) the surviving spouse would receive 50%. The surviving spouse could still bring the FMS claim.
The WSA provides for the surviving spouse to receive the share they are entitled to under the MPA plus their bequest in the Will. The surviving spouse can still bring the FMS claim. The surviving spouse may receive more than intended and the children from the first marriage may receive less than intended.
The unintended results not only affect blended families but may also affect farm/ranch and small business owners where their succession plan involves distributing property between their spouse and children.
As a result of representations made by Alberta estate lawyers this proposed change is on hold for further consideration before it comes into effect.
Estate planning is complicated when trying to balance the competing family interests. The WSA and amendments to the MPA add a new level of complexity that may apply not only to future estate plans but retroactively to existing estate plans. This is a further reason to review your estate plan with an estate planning lawyer who understands the complexity of balancing these competing family interests.