Why have I not been notified about parent’s estate?
Topics covered:
- Explaining how a parent’s wealth can end up in the hands of a step-parent without anything of probate.
- Explaining how joint tenancy works, the survivor automatically becoming the sole owner when the joint owner passes away, the result being that the property doesn’t form part of an estate
- Explaining that beneficiaries can be named for registered investments such as RRSPs and TFSAs, the result being that those assets don’t form part of an estate
- Explaining that with a simple will, nothing stops a step-parent from making a new will after your parent dies, cutting you out as beneficiary
- Recommending serious discussions with parents/step-parents about their estate plans
It’s been a year since my mother’s death. I have a copy of her will that names me, along with my stepsiblings, as beneficiaries. My stepfather is the named executor, but I’ve heard nothing from him about her estate.
Don’t I have to be notified?
Maybe your mom didn’t have an estate.
But of course, she did. She and my stepfather owned their home and it’s worth at least a million and a half dollars.
And my mother had a sizeable Registered Retirement Income Fund (RRIF).
And a Tax Free Savings Account (TFSA).
And I know she always had at least $20,000.00 of emergency money in a bank account.
I’ll start with the home she owned with your stepfather.
There are two typical ways to share ownership of property. One is in “joint tenancy”. The other is as “tenants in common”.
Most spouses own their homes in joint tenancy. If one joint tenant dies, their interest in the property disappears leaving the property solely in the name of the survivor.
It’s not quite that magical, but close.
The surviving spouse simply sends a form along with the death certificate to the Land Title & Survey Authority of BC (commonly known as “Land Titles”), which then removes the deceased’s name from title.
With tenants in common, death does nothing to change title. The deceased ownership in the property forms part of their estate and the estate administration process must occur for that property interest to be passed on to beneficiaries.
I suspect that your mother and stepfather owned their home together as joint tenants, your mother’s name being removed from title on your stepfather sending her death certificate to Land Titles.
Next, the RRIF and TFSA.
These are known as “registered” investments because you must register them with the government to enjoy their tax benefits.
You cannot jointly own a registered investment with your spouse.
But you can name your spouse, or anyone else for that matter, as beneficiary of a registered investment, which works similarly to naming a beneficiary of your life insurance policy.
When you die, the registered investment is paid out to your named beneficiary.
It doesn’t form part of your estate.
Your mother might have named your stepfather as beneficiary of her RRIF and TFSA.
Finally, the emergency fund.
Your mother’s bank account might have been a joint account, in “joint tenancy” with your stepfather, leaving your stepfather with the full contents on your mother’s death.
But what about my mother’s will that very clearly leaves her estate to my stepsiblings and me?
If your mother indeed had no estate, her will is meaningless.
I suspect that your stepfather made a similar will, leaving his estate to you and your stepsiblings.
It’s a common estate plan, to structure things so that your spouse has the use of all of your combined assets until they die, with everything going to children after the second spouse passes away.
But unless your mother and stepfather had an enforceable agreement that they wouldn’t revoke their wills after the other of them died, there’s nothing stopping your stepfather from making a new will that cuts you out completely.
You can ask him to see his will, but how uncomfortable is that!? And he is not required to show you.
Even if he gave you a copy of a will naming you along with your stepsiblings as beneficiaries, he could simply make a new will tomorrow.
You’re going to have to wait until your stepfather’s death to learn the ultimate outcome.
I encourage you to have serious discussions with your parents about their estate plans. The earlier the better.
It’s uncomfortable subject matter!
None of us likes to think about our mortality. It’s even worse to think about greedy kids circling like vultures!
But us parents generally want our kids to benefit from whatever might be left over after we die.
And in blended family situations, there’s a significant likelihood that won’t happen unless steps are taken to ensure it happens.
Everyone in a blended family might appreciate this uncomfortable topic being discussed and sorted out to remove uncertainty.
Whatever is decided then needs to be discussed with a lawyer to ensure that the plan is put in place in such a way that everyone can rest easy that it is legally enforceable.
