Thursday, 4 May 2017

Unequal Treatment of Adult Children Beneficiaries

Author: Barbara Kott, Student-at-Law

When drafting a will, people expect that their wishes will be respected after they pass away. However, like any other legal document, the validity of a will may be challenged. If a challenge is successful, your estate may be divided based on the Wills and Successions Act of Alberta, which may not be in keeping with your wishes. If you plan to treat your adult children unequally in your will, you should consider the possibility of challenges from the adult child inheriting a smaller share.

Adult children beneficiaries may challenge a will by arguing that their deceased parent lacked the requisite mental capacity to make the will. Or, they may argue that the deceased parent was under duress or was unduly influenced when they made the will. Regardless of whether these arguments have merit, your estate will have to defend them, and pay the cost of doing so. Litigating a challenge to a will can significantly reduce or deplete the assets of an estate.

In some instances, a conversation with your children may be sufficient to relieve you of a concern that they may challenge your will. In other instances, further precautions may be necessary. Here are some tips for preventing your adult children from successfully challenging your will:

1. Inter Vivos Gifts
An inter vivos gift is a gift given during the donor's lifetime. If you give property away during your lifetime, it will not pass through your estate. Therefore, you may prevent a child who is unhappy with their inheritance from challenging your will by giving all, or some, of your property before your death. However, a gift is also open to challenge. For ways to ensure that your gift is securely given see our blog post, Supporting Gifts and Property Transfers Down the Road.

2. Document Your Intention
You can prevent a claim against your estate by an unhappy child beneficiary, or create evidence to be used by your estate in defending a claim, by drafting a document stating your intention. The document should state that you intend an unequal distribution of your estate, and why. You can keep the document private, only to be provided to the executor of your estate, unless the will is challenged, in which case you can leave instructions that it may be provided to a child challenging the will, and also used as evidence in support of the will. The use of a document stating your intention can be discussed with your lawyer when you prepare a will.

3. Update Your Will
Assets that are not disposed of in your will, or codicil to a will, will be disposed of in accordance with the Wills and Successions Act of Alberta. If you are looking to treat your adult children unequally, an intestate disposition may not achieve that end. Therefore, it is important to update your will so that it includes all of your assets and is in keeping with your wishes.

Another factor to consider is whether you want your child's spouse to benefit from the inheritance you leave to your child. If you give property to a child during your lifetime, or through your will, your child will need to take steps to prevent that property from becoming family property for the purposes of division in the event of a divorce. Your child should be aware of the exempt property provisions under the Matrimonial Property Act, so that they can make decisions about whether they want all or a portion of an inheritance to be property of their marriage.

2 comments:


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