Same sex marriage has been legal in Canada since 2005, but unfortunately, business policies, provincial law, and social convention have not always kept up with this shift. In many cases, there are laws and policies that benefit or protect heterosexual couples without providing the same level of protection to same-sex couples – this is especially true in certain arenas like estate law. Because of this, estate planning is essential for same-sex couples. Here is a look at why:
Provincial Definitions of Next of Kin
If you die without a will, your assets are normally given to your next of kin. Based on federal law, your next of kin would be your spouse. However, although Canada was one of the first countries in the world to legalize same-sex marriage, provincial law has not always kept up with the new law.
Assuming that your assets will be given to your spouse can be risky if you are in a same-sex relationship. In the absence of a will, some provinces only recognize blood relatives as legal beneficiaries, and in that case, your estate may pass to your parents or children. Contact an estate lawyer to find out about the laws in your province and how to protect yourself.
The Danger of Family Disputes
If your family does not approve of the union, it is especially important that you hire a professional to help with your estate planning. If your have your final wishes detailed in a will, that document is legally binding, and your relatives cannot make changes, regardless of their personal feelings on the matter. Your will can explain your final wishes on resuscitation and life support as well as your plans for how your assets should be distributed.
Protecting Your Children
When it comes to estate planning, money is not the only issue to consider. If you have children from a previous relationship that are being raised by your current partner, you also need to consider their future after your death.
If you want them to continue living with your partner after your death, you can stipulate that in your will. However, if you do not do that, your family or their other blood relatives may be able to legally swoop in and take the children.
Even if the children are yours together, you should still work with an estate planner to ensure that everything is in order. If both of you do not have clear custody of your children, you will need to establish custody or make the appropriate arrangements in your will.
American Assets and Estate Law
If you or your partner has American assets, you should also address those assets with an estate planner. If someone inherits more than $5.25 million USD in cash or assets, that individual has to pay estate tax on that inheritance. The only exception is if the estate passes from one spouse to another.
Prior to 2013, same-sex couples in the United States were required to pay estate tax if one partner died and left his or her assets to the remaining partner. Fortunately, when Edith Windsor's wife died and she was ordered to pay $363,000 in estate tax, she decided to take the US government to court. As a result, DOMA (Defense of Marriage Act) was overturned, and now, same-sex couples receive the same reprieve from estate tax that straight couples get.
This reprieve was also extended to same-sex couples in Canada with American assets. Now, if your partner dies and leaves you US assets, you no longer have to pay any estate taxes. However, this is a relatively new legal development, and you should still work with an estate planner to ensure that your assets are safe.