6 Essential Estate Planning Considerations for Blended Families

Estate planning can be complex for any family, but blended families often face unique challenges. Ensuring your assets are distributed as you wish while balancing the needs of your current partner, children, stepchildren, and other family members may require additional, careful legal planning.

Let's explore key considerations for blended families looking to create an effective estate plan.

In This Article:

1. Superannuation & Life Insurance

One of the most common misconceptions about your assets is that superannuation and life insurance automatically become part of an estate when you die.

Unless you've taken specific steps with your superannuation fund or life insurance provider, these assets will not be distributed according to your Will. Instead, the superfund trustee or insurance company decides how any benefits are allocated.

You should ensure that the necessary binding death benefit nominations are in place to direct these funds according to your wishes, which may or may not include or exclude specific family members

2. Define Asset Ownership

A crucial part of estate planning is understanding the nature and extent of the assets you own, and then stating how these assets are to be dealt with when you die. Remember that only assets held in your name can be passed on according to your wishes.

Jointly held assets, such as property owned as 'joint tenants', automatically transfer to the surviving co-owner. This is common with the matrimonial home, where ownership typically passes to the surviving spouse. Understanding this distinction is key to ensuring your estate plan works as intended.

If you do not want your ownership in a property to automatically transfer to the other owner, you should consider changing the ownership type to 'tenants in common', which allows you to bequeath your share of ownership to anyone in a Will.

To learn more about the key differences, read our article on Joint Tenants vs. Tenants in Common.

3. Marriage & Divorce

If you’ve divorced or remarried, it’s important to know how these events can affect your Will.

Marriage

In Queensland, marriage generally revokes any Will made before the marriage automatically, unless you made the Will in contemplation of marriage. This is because any new spouse has an automatic claim to your estate, and they are generally expected to be included as a beneficiary.

Note that the 2017 amendments to the definition of 'marriage' in the Marriage Act 1961 could potentially revoke a Will a same-sex couple made before these changes took effect. If this is relevant to you, please contact us so we can advise you on the legality of any Will signed before these amendments.

Divorce

Unless a Will explicitly states otherwise, a divorce automatically revokes any provisions made in favour of a former spouse, except for appointing that spouse as trustee of property left in trust for beneficiaries that include the former spouse's children. Under section 15 of the Succession Act 1981, divorce also revokes any provision appointing a spouse as executor, trustee of specific trusts, or guardian.

As such, for those in blended families, a prior Will from a previous marriage may, in specific circumstances, unintentionally leave assets and powers to a former spouse.

Key life milestones, such as marriage, divorce, and the birth or death of children, are times to review your estate plan to ensure it is up to date and reflects your current wishes.

4. Providing For Your Partner

Ensuring your spouse or partner is well provided for after your passing is a key part of any estate plan, particularly in blended families where conflicts may arise between children and stepchildren.

Proactive estate planning can ensure that your partner has the financial security they need whilst balancing any financial or non-financial assets you intend to leave to your other beneficiaries.

What 'providing for your partner' includes depends on your relationship and circumstances, and you may want to consider living expenses, household costs, and future health care needs. If your spouse is financially dependent on you, it is crucial to think about how these expenses will be covered after your death.

You may want to consider:

• Direct Bequests

  This means leaving specific assets or sums of money directly to your spouse so they can access funds immediately.

  
  

• Superannuation and Life Insurance

  As discussed above, you can nominate your partner as the beneficiary of your superannuation or life insurance policy, providing them with additional financial security.

  
  

• Trusts

  Consider setting aside funds for your spouse's future medical costs, long-term care, or assisted living. You may want to set up a trust that provides financial support for your partner’s health-related expenses, separate and distinct from the assets bequeathed to other beneficiaries.

If you fail to adequately provide for your spouse, they will generally have the right to make a Family Provision Application against your estate.

Family provision applications are generally complex, lengthy and costly endeavours, and can add to an already stressful and emotional period for loved ones. They are common in blended families because of diverse family dynamics and the deceased's specific wishes.

As we'll discuss below, mutually binding Wills and open communication with your partner about your wishes are vital to putting a secure estate plan in place.

5. Children

For those in blended families, you will need to consider whether to include any biological children, step-children, foster children or adopted children as beneficiaries in your Will. Every family dynamic and parent-child relationship is unique, as are the financial and non-financial support children receive.

As we've noted, you have a legal obligation to provide for your children, but if you wish to exclude a particular child, or a group of individuals (e.g. all your step-children), our solicitors can work with you to discuss the best path forward.

We have seen some couples exclude each other's step-children, include all children, exclude all children and everything in between. No two families are alike, and you will need to consider you and your spouse's goals. Regardless of your decision, you should clearly and explicitly state the reason and intent behind it in your Will to reduce the risk of estate disputes or family provision claims.

One important thing to note: If you leave your estate entirely to your current spouse, they may later change their Will and exclude your children from a previous relationship. For blended families with step-children, we always recommend couples consider mutually binding Wills to protect your loved ones after you're gone.

6. Mutually Binding Wills

A mutually binding Will is a binding agreement between two individuals to have their Wills drafted in a particular way, preventing them from later changing their Will after the other's death or without that person's consent.

Mutually binding Wills are common in blended families, and their purpose is to prevent the survivor from excluding step-children or otherwise changing their estate plan in a way that would disadvantage the deceased's spouse's children.

While these agreements generally involve additional costs to prepare, they ensure your biological children (or any listed beneficiary, for that matter) are adequately provided for. Although mutually binding Wills can seem restrictive, they are a valuable tool for maintaining fairness and protecting all beneficiaries' interests.

Learn more about Mutually Binding Wills by reading our in-depth article here.

Tailor Your Estate Planning

Whilst estate planning can seem complicated, especially for blended families, you must take the time to both discuss your wishes with your spouse and put things in place before it's too late. Ultimately, it protects your loved ones and ensures those you care about are looked after.

Don't hesitate to contact us if you have any questions or want to discuss your unique situation further. Or, get started today by scheduling your estate planning appointment using the button below.

Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current, and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication are those of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.

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