Blended Families + Estate Planning
Written by: Karlene Wightman l Legal Team
Approaching a solicitor to discuss what would happen to your Estate (your assets and your children) when you die can be a daunting task. We’re not going to sugarcoat it, but we are going to be upfront and honest when we say that estate planning for blended families can often post significant challenges for clients and also for their solicitors. Families come in all shapes and sizes, but this should not stop you from seeking proper legal advice in relation to your Will as well as your Powers of Attorney.
By definition of the Oxford Dictionary, Blended Family;
A family consisting of a couple, the children they have had together, and their children from previous relationships.
A blended family arises where one or both of the parties to a marriage have had previous partners and/or marriages. That previous relationship may give rise to obligations that continue well past the end of that relationship and need to be considered when the question of estate planning comes into play. Furthermore, it can become more complicated where there are children from previous relationships and also when children were born of the new relationship. A blended family does not only emerge because of separation and divorce but may also occur where one party of the marriage dies and the surviving party re-marries or re-partners.
In a lot of situations, the couple who are starting their journey of estate planning (whether they are married or they are in a de-facto relationship) wish to provide a benefit for each other in the first instance and then for their collective children once both parties have died. While this sounds straightforward enough (and it definitely can be) there are many risks involved with structuring what is considered, simple Wills in this way for blended families.
Assets Are Distributed By Asset Structure
There are different ways in which blended families structure their legal assets:-
- Jointly
When couples marry or form a de-facto relationship, many people choose to merge their assets. This means that bank accounts, shares, property, and the like are owned jointly. The consequences of this when discussing your Estate is that these assets automatically transfer to the survivor and do not form part of the deceased Estate. For many people, this was the intention when merging the assets. However, others are quite shocked that they cannot leave their “half” to whomever they choose (their own children, as an example).
Often when assets are held jointly, couples do a “mirror image Will”, which means that they mutually agree on who will benefit from the joint Estate, and the decision is reflected in both Wills. Unfortunately, the danger in this situation is that the surviving spouse or de-facto partner will choose to alter their Will upon the death of their spouse. This decision can be based on many factors but is often a concern for all members of a blended family.
- Separately
Some couples choose to keep their assets separate when they enter a relationship. If this is the case, the starting point is that the assets belonging to the individual making a Will can be gifted to whomever they choose. In these circumstances, many people choose between the following options:
- They leave their entire estate to their spouse/de facto partner;
- They leave a proportion to their spouse/de-factor partner and the remainder to their children (or family members); or
- They leave their entire estate to their own children or family members.
When making this decision, it is important to consider all the circumstances and receive appropriate legal advice. Even if all of your assets are separate, after considering all of your circumstances, it may still be appropriate to leave the bulk of your estate to your spouse/de facto.
Legal Questions + Answers for Mix In Families
The definition of a blended family is often different. Some families have a mixture of children together and with ex-partners, some families have children with ex-partners and no children together, and some families have one spouse/de facto that has children and the other spouse/de facto does not.
When deciding what your Estate Planning is going to be, the family dynamic is very important as to how the assets are held. Potential Part IV claims against an Estate (which we will not cover in this article) need to be considered, together with the individual needs of each family member when determining what proportion of your Estate should be gifted to whom.
Sometimes it may be the case when there are some children in another relationship and some children in a current relationship, that extra thought needs to be given to what inheritances each child is likely to receive and what is fair and reasonable in the circumstances.
Mutual Will Agreements + Specific Documents
it is sometimes possible for couples to sign a “Mutual Wills Agreement”. This is a contract between the parties stating that neither of them will change their Will without having the consent of the other spouse, or their Executor(s) if one of the parties is deceased. The main benefit of a Mutual Will Agreement is that it gives each party certainty that their wishes will be carried out. Each party to the relationship may agree to a “mirror image Will” at the time, but there are many reasons why a Will is changed after the death of a spouse/de-facto partner.
It can be a difficult conversation to have with your spouse/de-facto partner as it can raise issues of trust, but in the end, maybe the only way to ensure that all parties can have certainty and peace of mind.
Guardianship + Avoiding Legal Issues
Often the biggest concern of parents is what will happen to their children upon their death. In blended families, it can often be the case that one of the children’s parents is ‘out of the picture’. Consequently, the children live full-time with their biological parent and their step-parent. Understandably, the biological partner is worried that, if something were to happen to them, their child or children would be separated from their step-parent and forced to live with their other biological partner.
A ‘Guardianship Clause’ can be written into your Will which outlines your wishes in relation to who you would want to look after your minor children. It is simply, however, an ‘expression of your wishes’ and the person appointed in your Will would need to apply for custody of your child/children.
When the person appointed applies for custody, they should be armed with evidence to support why they should be appointed as the guardian. Writing a letter, to be supplied to the Court should you pass away, is something that would assist the Court in making their decision. Additionally, any letters from other family members, paperwork or other such evidence should also be kept in a file to be presented to the Court if ever needed.
If you would like more information on Appointing a Testamentary Guardian, check out this article to give a bigger understanding!
Canny Legal, Legal Advice + Your Blended Family
Navigating your way through the ‘midfield’ that can be blended families can be overwhelming for many people. This feeling often then stops them from seeking legal advice and planning for their death. Understandably, when you feel that you do not have a ‘straightforward’ situation, it is easy to put off what needs to be done. However, this is a very dangerous position to take, and it will leave your family with a much bigger mind field to deal with, and often the results are not what you would want.
Check out our latest Podcast to have a listen to our Senior Solicitor, Karlene Wightman talk about all things blended families from start to finish!
Get in touch with our team today, to have a conversation and to get the ball rolling. We take the time to listen, to understand and find a way to ensure that we can do everything possible to put your mind at ease and have all the legal side of things taken care of for you.
