Case Study: Estate Planning for a Blended Family Using a Trust and Beneficiary Designations
Mike* is married to Joyce. He has a stepson, Ryan, from his first marriage.
While Joyce has a daughter, Emma, who has a history of spending money quickly and struggling to manage finances. This family dynamic makes estate planning more complex.
Written By Tiffany Woodfield, Financial Advisor, TEP®, CRPC®, CIM®
Mike wants to make sure Joyce is financially secure if he dies first, while also ensuring that Ryan eventually receives his inheritance.
To achieve this, he names his stepson, Ryan, as the beneficiary of his RRSP and life insurance policy so those assets pass directly to Ryan and do not form part of his estate.
Mike also places some of his non-registered investments into a trust.
The trust can provide income and financial support to Joyce during her lifetime, and when Joyce passes away, any remaining assets are distributed to Ryan.
Mike still uses his will to deal with assets that remain in his estate, such as personal belongings, vehicles, or other assets that were not transferred to the trust. He feels that Emma (his wife’s daughter) will be taken care of through Joyce.
You can see from this example estate planning isn’t just about saving probate fees. Sometimes it’s about controlling who gets what, when they get it, and protecting the people you care about.
Why This Matters
Blended families often require more careful estate planning because a simple will may not fully protect everyone’s interests.
If Mike left everything directly to Joyce, she could later change her will or use the assets during her lifetime. Ryan might receive less than Mike intended—or nothing at all. On the other hand, leaving everything directly to Ryan could leave Joyce without enough financial support.
By coordinating beneficiary designations, a trust, and his will, Mike can:
- Provide immediate financial support for Ryan
- Help ensure Joyce remains financially secure
- Preserve part of his estate for Ryan after Joyce dies
- Decide who receives each asset and when
- Reduce the value of assets that must pass through probate
- Make his intentions clearer and reduce the risk of family conflict
This type of planning is especially important in British Columbia because wills can be challenged under the province’s wills-variation rules. A well-documented and professionally prepared plan can help demonstrate Mike’s intentions, although it cannot prevent someone from making a claim.
It is also important to distinguish probate planning from tax planning.
Naming Ryan as the beneficiary of Mike’s RRSP may allow the account to pass outside the estate, but it does not make the RRSP tax-free. Unless a rollover or another exception applies, the RRSP’s fair market value is generally included as income on Mike’s final tax return. The CRA explains the tax treatment here.
Key Tools
- Beneficiary Designations: Mike names Ryan as the beneficiary of his RRSP and life insurance so the proceeds can pass directly to him rather than through the estate.
- Trust: The trust provides financial support to Joyce during her lifetime while preserving any remaining assets for Ryan.
- Will: Mike’s will determines how assets that remain in his estate will be distributed and names the executor responsible for administering the estate.
- Trustee: A carefully selected trustee manages the trust, follows its terms, and decides when or how money should be distributed.
- Coordinated Tax Planning: Professional tax planning helps Mike understand the tax consequences of his RRSP, non-registered investments, and trust.
- Letter of Wishes: Mike can prepare a non-binding letter explaining his goals and providing guidance to the trustee and executor.
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Read More:
💎 How Does a Family Trust Work in BC?
💎 Who Needs to Do Estate Planning in Canada?
💎 Why Should You Use Trusts for Estate Planning Canada?
About the Author
TIFFANY WOODFIELD is a senior financial advisor, estate-planning expert, and dual-licensed portfolio manager based in Kelowna, British Columbia. She is the co-founder of SWAN Wealth Management, where she helps Canadian and cross-border families build lasting wealth, reduce tax risk, and create meaningful legacies.
As a TEP (Trust and Estate Practitioner) and portfolio manager, Tiffany works closely with successful professionals, business owners, and internationally mobile families who want to enjoy a more flexible, work-optional lifestyle. She combines deep technical expertise in wealth management with a strong focus on mindset, personal development, and purposeful decision-making.
Tiffany has been a contributor to Bloomberg TV and has been featured in major national and international publications, including The Globe and Mail and Barron’s, for her insights on retirement planning, cross-border wealth issues, and estate planning.
Professional designations:
- TEP® – Trust and Estate Practitioner
- CRPC® – Chartered Retirement Planning Counselor
- CIM® – Chartered Investment Manager
*Names have been changed to protect the identity and privacy of the individuals in this story. Please seek the advice of professionals before taking action. This case study is for educational purposes only.