Divorce is a complex process that can significantly impact division of assets, including the inheritance of your children and grandchildren.
In this post, the second of a two-part series, we look at preventing your child’s spouse, whether married, common law, separated or divorced from your child, from claiming part of your child’s inheritance based on the “dependency” you created through your generosity during their marriage.
Succession Law Reform Act (SLRA)
The Succession Law Reform Act of Ontario governs the distribution of a person’s estate upon their death.
Section 31 of the act deals with preferential shares. It says that spouses and children are entitled to a preferential share of your estate if you die without leaving a will. This share is equal to one-half of your estate if there are no surviving children, or one-third if there are surviving children.
Under proposed changes to the act, common-law spouses will be included in this provision and given the same rights as married spouses.
Claiming a preferential share based on “dependency”
Many people generously support their grown children and grandchildren over the years. You may be one of them. You help with the cooking, pay for home and car repairs, subsidize their vacations. You give them a few hundred bucks on their anniversary.
Isolated, occasional gifts are fine. They’re not going to create dependency. It’s when, as a parent and possibly grandparent, you are constantly giving… to pay for your child’s mortgage, a car purchase, ongoing bills… your generosity, legally speaking, is creating a dependency. Not just for your child or grand children, but for your child’s spouse, married or common law.
And that can create a legal problem for your child when you pass away. Your daughter-in-law or son-in-law, married or otherwise, can turn around and say that you were the best parent-in-law in the world. You were so generous. But your generosity created a dependency. Therefore, their name should appear on the will. They could claim to be a dependent, and benefit from the estate you leave behind.
Parents who want to help their kids often don’t realize that the precedent they’re setting could be irreversible.
Let’s protect YOUR assets!
Our team can include a clause that addresses Section 31of the SLRA. It will state that the named beneficiaries of your assets are only your kids, not their spouses or common law partners. should defeat the “dependant’s relief claim” to part of the inheritance.
To learn more
For further insights, we invite you to read our first blog post in this two-part series – How to Protect Your Children’s Inheritance in a Divorce: Part 1. It deals with the tracing provision in the Family Law Act of Ontario.
And please don’t hesitate to reach out to us. We’re here to help you take the steps you need to protect your children’s inheritance.