Estate planning can be complex for any family, but for blended families, it often includes unique challenges. Ensuring that your assets are distributed according to your wishes whilst balancing the needs of your current partner, children, step-children, and other family members can require additional and careful legal planning.
Let's explore key considerations for blended families looking to create an effective estate plan.
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 specific steps have been taken taken 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 has discretion over 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. It's important to 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 are not wanting your ownership in a property to automatically transfer to the other owner, you should consider changing the ownership type to 'tenants in common', which allow you to bequeath your share of ownership to anyone in a Will. If you want to learn more about key differences, we recommend reading our previous article about Joint Tenants vs. Tenants in Common.
3. Marriage & Divorce
If you’ve gone through a divorce or have remarried, it’s important to know how these events can affect your Will.
Marriage
In Queensland, marriage generally revokes any Will made before that marriage automatically, unless the Will is made in contemplation of a marriage. This is because any new spouse has an automatic claim to your estate, and it's generally expected that they will be included as a beneficiary.
Note that the 2017 amendments to the definition of 'marriage' in the Marriage Act 1961Â could potentially revoke a Will made by a same-sex couple before these changes took effect. If this is appropriate for you, we recommend you contact us so we advise you of the legality of any Will signed prior to these amendments.
Divorce
Unless a Will explicitly states otherwise, a divorce will automatically revoke any provisions made in favour of a former spouse, except for the appointment of that spouse as trustee of property left in trust for beneficiaries that include the former spouse's children. Additionally, any provision appointing a spouse as executor, trustee of specific trusts, or guardian is also revoked upon divorce under section 15 of the Succession Act 1981.
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, the birth or death of children are times when you should be reviewing your estate planning to ensure it is not only up to date but also reflects your current wishes.
4. Providing For Your Partner
Ensuring that your spouse or partner is well provided for after your passing is a key component of any estate plan, particularly in blended families where there may be further conflicts between children or step-children.
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 will depend on your relationship and particular circumstances, and you may 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 to ensure they have immediate access to funds.
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 put a trust in place that provides financial support for your partner’s health-related expenses that is separate and distinct from the assets bequeathed to other beneficiaries.
It’s important to understand that if you fail to adequately provide for your spouse, they will generally have a right to make a Family Provision Application against your estate.
Family provision applications are generally complex, lengthy and costly endeavours, and can add to already stressful and emotional period for loved ones. They are common in blended families due to the diverse family-dynamic, and the particular wishes of the deceased. As we'll discuss below, mutually binding Wills and open communication with your partner about your wishes is vital to putting in place a secure estate plan.
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 is the financial and non-financial support given to children.
As we've noted, you have an obligation under law to provide for your children, but should you wish to exclude a particular child, or a group of individuals (e.g. all your step-children), our solicitors can work with you and discuss the best path forward.
We have seen some couples exclude each others 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. It's important, regardless of what your decision is, that the reason and intent behind such decision has been clearly and explicitly articulated in your Will to mitigate the risk of estate disputes or family provision claims.
One very important thing to note: If you leave your estate entirely to your current spouse, there is a risk that they may later change their Will and exclude your children from a previous relationship. For blended families where step-children are involved, we always recommend couples consider mutually binding Wills to ensure your loved ones are protected once your 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, prohibiting them from later changing their Will on the death of the other or without that person's consent.
Mutually binding Wills are very common when it comes to blended families, the purpose of which is to prevent the survivor from excluding step-children or otherwise changing their estate plan in a way that would otherwise disadvantage the deceased's spouse's children.
Whilst there are generally additional costs in preparing these agreements, they ensure that your biological children (or any listed beneficiary for that matter) are adequately provided for. Whilst mutually binding Wills can sometimes be seen as restrictive, they are a valuable tool for maintaining fairness and protecting the interests of all beneficiaries.
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 its too late. Ultimately, it protects your loved ones, and ensures that those you care about have been looked after.
At RHC Solicitors, our estate lawyers work with you to understand your particular circumstances, your goals and wishes, and help put together a comprehensive estate plan that works for you. No two blended families are the same, and it is critical that proper legal advice is sought before putting anything to paper.
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 is that of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
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