Canadian Consulting Engineer

Second Time Around

August 1, 2000
By Hank Bulmash, MBA, C.A.

Dave Howell is a vigorous looking man in his mid 50s. For many years he has been a principal in a consulting engineering firm, but as a single father, much of his free time has been devoted to raising...

Dave Howell is a vigorous looking man in his mid 50s. For many years he has been a principal in a consulting engineering firm, but as a single father, much of his free time has been devoted to raising his three children who are now adults. It’s a role Dave takes very seriously.

After he made himself comfortable in my office, I asked him how his kids were doing.

“In a way,” Dave said, “they’re the reason I’m here. I’m planning something that may have a profound impact on their lives. I’m getting married this fall.”

“Congratulations,” I said. “When will I meet the bride?”

“We’re having a party for all our friends in September, about a week after the wedding. You might have met Doreen today, but I wanted to speak to you in private about something that concerns me.”

“What’s that?” I said, leaning forward.

“My will. I estimate that my total assets are worth about $500,000. I believe Doreen may be worth a bit more than that, but I’m not really sure. I don’t feel that knowing exactly what Doreen has is my business. But, I want to be sure that my kids get what they’re entitled to when I die, and Doreen feels the same about her two sons.

“We went to a lawyer last week, and he suggested that we each write a new will. He thinks we should let the surviving partner continue to use the other partner’s assets during life. Then at the second death, the assets should go to the children.”

“Is that what you each want?

“More or less, but I understand there may be a problem. Doreen has a condominium that she lives in, and I have one too. I plan to sell mine and move in with her. Most of her money is tied up in her home, so I’d like to leave her something from my estate to live on if I die first. Doreen is seven years younger than me, so my dying first is the likely scenario.

“I told my brother my thoughts about this, and he strongly warned me not to leave anything to Doreen that I didn’t want to go to her heirs. He told me of a case where the second wife inherited all her husband’s assets and then left everything she had to her own children — leaving his children with nothing. In fact, he suggested that Doreen and I keep our finances completely separate. When I go, what I own should go to my kids. He said she should do the same for her boys.”

“Your brother is a cautious man,” I said, “but I think there’s a way to achieve all your goals without the risk of Doreen doing something that you haven’t planned on.”


“Use a marriage contract. Even ignoring the question of what happens at death, you should have one in case the marriage breaks up.”

Dave scratched his head. “I’ve heard that marriage contracts are very complicated and they can lead to bad feelings between the bride and groom.”

“That’s true. But, they are also a foolproof way to get what you want. A marriage contract will force you to deal with things that you would rather put off, and that’s one reason why they’re good.”

“Why don’t you think Doreen and I could just use our wills to establish what will happen to our assets?”

“The problem is that a will is not a contract. It’s not binding on other parties. That means if you make an arrangement with your wife that your will says “A” because her will says “B,” one of you may have your intentions thwarted. Each of you has no way of knowing that the other has lived up to his or her side the bargain.”

“Even if we use the same lawyer?”

“You can’t be sure that she won’t have a subsequent will drawn up without your knowledge. She could draw up a new will while you are alive or after your death. She’s the only person who signs her will. No one else does.”

“What if we put a note attached to the wills stating our intentions at the time of their creation.”

“Unless it’s a contract, such a document will not overrule a will that’s written later. A marriage contract would be binding on both of you and your estates. You can clearly delineate what happens to your assets in case of a marriage break-up or death. You can, for example, give up your right to your interest in the marital home in case of a divorce or separation.”

“Assuming the marriage is a happy one, how do I provide for Doreen without damaging my children’s inheritance?”

“You can create a trust either during your lifetime or in your will that gives Doreen an income interest in your property. And you can provide that Doreen will never own your property and that on her death your assets will be divided among your children.”

“Is that a good idea?”

“That is up to you to decide. You can create the trust as part of your marriage agreement. Doreen may want to create one of her own. For example, she might want to provide that you have the right to live in your joint home if she pre-deceases you, but that the condominium will go to her children when you die or move out of it.”

“Yes, we did discuss something like that,” David said.

“Think about it. Many people avoid marriage contracts because the negotiations can be difficult, but that’s only because the process forces you to put all your cards on the table. You must want to know what Doreen is really thinking and she wants to know what’s in your mind.”

“True enough.”

“Marriage contracts can be far more important for second marriages than for first marriages. You each have your own families, your own obligations. When you were married the first time, probably you and your wife did not have property issues.”

“Our major asset was my record collection,” Dave laughed.

“Now your assets are worth much more. You have to deal with that if you want to be fair to your kids.”CCE

Hank T. Bulmash C.A. is with Bulmash Cullemore, Chartered Accountants, Toronto


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