After a divorce or other major life event, updating your estate plan is essential. That means updating your will along with any other plan that names a beneficiary. Such plans include work pensions, RRSPs and insurance policies.
Additionally, if you want to customize your estate plan to meet the needs of your blended family, a trust can be an effective tool. Here let's discuss a few options.
An inter vivos family trust is useful for distributing assets during your lifetime. Every family is different, and you may have reasons for wanting to ensure that your children or other beneficiaries are provided for now, rather than waiting until after you are gone to distribute assets.
A testamentary trust is another option, particularly if you want to distribute assets after death. If your goal is to make sure your assets pass to your children from a previous marriage, then one option is to set up a testamentary spousal trust. The terms of the testamentary spousal trust can ensure that your second spouse benefits from the trust during his or her lifetime, but upon the death of your second spouse, the remaining assets are distributed to your children from your first marriage.
However, keep in mind that the ownership of your assets may need to be restructured to ensure that the assets pass through the estate and into the trust, rather than to your spouse.
An estate planning lawyer with experience in financial services can help you explore the full range of your trust options.