As blended families are on the rise in Australia, it’s important to consider the implications that being in a blended family may have on estate planning. A blended family is one that is comprised of both stepchildren and biological children. Estate planning for blended families can pose significant challenges, and it is important to seek advice from a reputable estate planning lawyer. Consideration will need to be given to best draft Wills in order to mitigate disputes.
First, let’s define some important estate planning terms:
- Testator: the person who made the Will and later died.
- Beneficiary: a person who benefits or receives a gift according to the Will.
- Executor: a person nominated in the Will to distribute gifts as per the wishes of the testator and pay any debts incurred from the estate.
Challenges in Blended Family Estate Planning
It is common practice for a person to leave the entirety of their estate to their spouse in their Will, however this can be problematic for blended families.
Within blended families, there can be multiple competing interests, which complicates estate planning.
The traditional format for Wills leaving everything to the surviving spouse, and then to the children once they pass away, is unlikely to be appropriate for blended families, as there are biological children, stepchildren and past partners to consider.
It is also important to remember that most assets held jointly such as a house owned as joint tenants or joint bank accounts, will pass directly to the person holding the other share and will not form part of the estate and therefore cannot be included in the Will.
Additionally, superannuation does not automatically form part of the estate but can instead be left to specific beneficiaries through a binding death benefit nomination.
It is also important to consider who the executor will be. Executors have the important role of fulfilling the wishes of the deceased as per the terms of the Will. In blended families this can pose an issue where the executor favours some beneficiaries over others, for example stepchildren over biological children.
Creating Wills and Trusts for Blended Families
A simple Will may be unsuitable for blended families, especially if there is turmoil within any relationships in the family.
Creating a testamentary trust may be one way to minimise potential disputes and ensure that certain intended beneficiaries’ interests are protected.
“A testamentary trust is a trust which is formed in a Will and comes into force when the testator dies. It enables a testator to preserve certain assets and ensure they are given to the intended beneficiaries. It also protects the assets from third parties such as creditors.”
Mutual Wills may be a suitable alternative to a simple Will.
“Mutual Wills are made by couples and involve either an express or implied contract to not revoke the Will after one of the testators dies.”
Mutual Wills allow for provision to be made for both parties’ children and stipulate generally how the surviving Will maker should divide assets after their own death, to include the wishes of the other person.
Mutual Wills can still be changed however and can be difficult to enforce, so often a testamentary trust is preferable.
Guardianship and Custody Considerations
In situations where a child is cared for by one of their biological parents and a step-parent, with the other biological parent out of the picture, the biological parent responsible for the child may try to ensure that the child stay with the step-parent should the biological parent die.
In most circumstances, the child’s other biological parent will gain responsibility or “custody” of the child. If the other parent is unable to parent for any reason, even people named in the Will to take on the role of guardian will need to apply to the court for parenting orders.
Working with an Estate Planning Lawyer
It is important to seek advice from an estate planning lawyer and to avoid DIY Wills, especially for members of blended families.
The cost of engaging an estate planning lawyer to draw up a proper estate plan will be minimal compared to the costs required to remedy an uncertain or disputed estate plan.
An estate planning lawyer can help you to determine how best to approach estate planning for your particular circumstances. It is better to seek the advice of a lawyer with experience in this area of law to ensure your estate planning documents are well drafted.
Tips for Blended Family Estate Planning
The main considerations for blended families in relation to estate planning include:
- Who should be the executor;
- Who are the intended beneficiaries and should former-partners and stepchildren be provided for;
- Whether there are likely to be any disputes; and
- Finding a reputable estate planning lawyer to advise and prepare the appropriate documents;
Above all else, it is imperative to seek legal advice for your specific family dynamic.
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Kate Scolyer – Solicitor– Matthies Lawyers
Should you wish to obtain advice regarding your estate planning matters, please contact Matthies Lawyers for an obligation-free consultation or call +61 3 8692 2517 today.
Disclaimer: This article contains general information only and is not intended to be a substitute for obtaining legal advice