No inheritance to evil stepson – Part 4
- Describing more estate planning tactics a spouse can secretly take, such as changing beneficiary designations on TFSA, RRS/RRIF, secregated funds, and changing the ownership status of their home.
This is the fourth and final column in a series about preventing an evil stepchild from receiving an inheritance from you.
Amanda’s stepson Nicholas has been doing his level best to make her life miserable since his dad got together with Amanda when Nicholas was a budding teenager.
Amanda, who has no children of her own, has done everything she can to build a positive relationship with Nicholas.
Early in their relationship, optimistic about positive change, Amanda and Robert implemented a traditional estate plan that would result in Nicholas inheriting whatever was left of their combined wealth on the second of them dying.
Amanda is no longer okay with that.
In my first two columns I described what Amanda and Robert could do together to implement an estate plan that would result in Nicholas inheriting only Robert’s 50% of their combined wealth, satisfying Amanda’s wish that her 50% would go to a beneficiary of her choice.
Last week, I considered what Amanda might do if she feared that voicing her wishes to Robert might upset the relationship applecart.
I proposed that she could secretly change her will, noting that this would solve her problem only if Robert dies first.
This week I will share steps that Robert might secretly take if he gets anything of an inkling that Amanda won’t follow through with passing all their combined wealth to his son if he dies first.
These secret steps will have the result of depriving Amanda from the use of Robert’s share of their wealth until she dies because that wealth is passed on to Nicholas on Robert’s death.
Robert could change the beneficiary designation on his TFSA from Amanda to Nicholas.
He can do that without letting Amanda know. Beneficiary designations are strictly confidential. Investment companies cannot notify those who are added or subtracted as beneficiaries.
Robert could do the same with the beneficiary designation on his RRSP/RRIF.
If Robert has additional investments, he could put them within a segregated fund which also allows for a beneficiary designation.
These investments will pass directly to Nicholas on Robert’s death without passing through his estate.
And Amanda won’t have a clue until it’s too late.
A couple’s home is often their largest investment. Typically, both are registered owners as “joint tenants”, which means that when one of them dies the survivor automatically becomes the sole owner.
It’s a classic probate avoidance tool.
By surreptitiously and unilaterally filing a document at the land title office, Robert can change the status of their ownership from joint tenancy to tenancy in common.
The land title office won’t send notice of this change to Amanda.
She won’t find out about the change unless she searches the title to their home. And has the sophistication to recognize that this change has been made.
When two co-owners of property each own a 50% share as tenants in common and one of them dies, the deceased owner’s 50% passes to their beneficiary under their will.
If taking all these other secret steps, Robert might secretly make a new will naming Nicholas as the sole beneficiary.
Amanda could use B.C. law to fight Robert’s will for failure to provide for his wife, but that will drain much of the estate in legal fees and not do anything to help with the investments passing outside the estate through beneficiary designations.
The only way to achieve certainty about an estate plan that will implement your wishes is for both spouses to agree to make an iron clad plan that has protections in place against surreptitious changes.
If you fear that your spouse won’t cooperate, you’re left with deciding between:
- Staying in the relationship and potentially using cloak and dagger tactics that might also be used against you, or
- Leave the relationship and taking complete control over what happens to your hard-earned wealth when you die.
Consult with a lawyer before taking any steps I’ve discussed in this column series. Estate planning is complex. You can be confident about steps you choose to take, or not to take, only after having a proper consultation with a fully informed lawyer. I no longer do that work, but I can help you find a lawyer to assist you if you reach out to me.
