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Crafting Your Legacy - Tailored Wills for Blended Families
Family dynamics are evolving, and so is the concept of a traditional family. In Australia, over 10% of families include children from previous relationships (Source: Australian Bureau of Statistics 2021).
If you’re part of a blended family where you or your partner have children from prior relationships, tackling the complexities of estate planning is critical.
CLO Lawyers Toowoomba: Navigating Estate Planning for Blended Families
At CLO Lawyers, we are experienced in navigating the intricacies of creating Wills that cater to various classes of beneficiaries, encompassing current partners and children from past and present relationships. Blended families pose unique challenges due to competing interests among family members.
Our experienced Wills and Estates team at CLO Lawyers takes a nuanced approach to estate planning. We guide you in crafting a legally sound Will that accommodates all family members, ensuring your legacy is preserved and the needs of all family members are met.
Balancing Act: Providing for Partners and Protecting Children
Balancing the financial provision for your current partner while safeguarding the interests of your children demands thoughtful consideration. Leaving everything to your partner doesn’t guarantee your children’s inheritance, as your surviving partner might change their Will to exclude your children after your passing.
Several factors need consideration, including the size of your estate, the existence of joint assets (that will automatically pass to your partner outside your estate), the financial needs of your current partner, the financial dependence of family members, and the nature of the relationships between your current partner and your children.
Assets Outside Your Estate – A Crucial Consideration
Assets like joint property, superannuation, life insurance, and assets held in family trusts require special attention in estate planning.
Joint Assets
Assets owned by you and your new partner as joint tenants will automatically pass to your partner on your death, regardless of the terms of your Will.
In contrast, assets held as tenants-in-common pass to the beneficiaries nominated in your respective Wills upon death, such as children of an earlier relationship.
The funds in joint bank accounts will also be passed to your partner upon death.
Assets Held in a Family Trust
Assets held in discretionary family trusts are owned by the trust and don’t form part of your estate. They are dealt with under the terms of the trust deed.
Superannuation and Life Insurance
Superannuation and any associated life insurance don’t automatically fall within your estate on your death.
You must separately nominate a beneficiary to receive your superannuation. This is achieved by way of a ‘binding death benefit nomination’. Without a binding death benefit nomination, regardless of the bequests in your Will, your superannuation fund could decide to pay your superannuation to someone you don’t want to receive it.
o Life insurance policies are an excellent way to make an immediate and significant gift to children from past or present relationships so that they inherit immediately after your death. Like superannuation benefits, one or more life insurance policies can nominate intended beneficiaries to receive a payout on your death.
Crafting the Perfect Will for Your Blended Family
Choosing the correct type of Will is crucial. CLO Lawyers explores options like Mutual Wills, Reciprocal Wills, and Testamentary Trust Wills, providing insights into their benefits and best applications.
Mutual Wills
A Mutual Will Agreement is a contract entered into by two people at the time they prepare their Wills together. It specifies clauses of the Wills that the parties agree they will not alter after one of the parties dies. Legal action can be taken if the agreement is breached.
Reciprocal Wills
Reciprocal Wills are created separately but also contain mutual provisions.
However, a Reciprocal Will has no contractual obligations preventing spouses from changing their Will once their partner dies.
Testamentary Trust Wills
A trust is an arrangement where a trustee (a person or company) holds assets on behalf of beneficiaries. Testamentary trusts are created within your Will. They are usually discretionary trusts, enabling the trustee to decide how assets are distributed among your beneficiaries. Importantly, a Testamentary Trust only takes effect after your death.
This arrangement protects an estate from being diverted to a ‘new’ family of your surviving partner. Trusts also have tax and asset protection advantages. They can be invaluable when a beneficiary is vulnerable or in a high-risk profession.
Family Provision Applications
A ‘family provision application’ can be made to the Supreme Court by a partner, child, or dependant of the Willmaker seeking an inheritance (or additional inheritance) from an estate. This could be initiated by your new partner or your children if they feel dissatisfied with their inheritance.
Claims usually arise in scenarios where:
- The entire estate is left to a new partner, excluding children from a previous relationship.
- The estate is left to children from a previous relationship, but the surviving partner does not receive a sufficient bequest.
- Children from a second relationship are adequately provided for, but children from a previous relationship are not.
Balancing the interests of potential claimants is crucial to avoid a claim.
Providing your new partner with the right to reside in the family home can be helpful, either by granting a life interest or allowing them to reside for a specified period.
This approach will enable you to leave your share of the family home to your children while allowing your surviving partner to remain in the property until their death or other specified period. This arrangement will only be an option where the home is jointly owned with your partner if the manner of ownership is changed.
Family provision applications are costly to defend (resulting in estates being significantly eroded in legal costs) and often result in irreparable damage to family relationships. For these reasons, there is merit in trying to avoid them where possible.
Legal Guidance for Your Estate Plan
Crafting a comprehensive estate plan involves more than just a Will. The Wills and Estates team at CLO Lawyers is here to guide you through every step of the estate planning process.
Engaging an estate planning lawyer to create an estate plan will be minimal compared to the costs required to remedy an uncertain or disputed Will.
Why Choose CLO Lawyers Toowoomba?
- Experience
We have a proven track record of success in guiding blended families through estate planning.
- Compassion
We understand the emotional complexities and will approach your situation with empathy and sensitivity.
- Clarity
We explain complex legal concepts in plain language, ensuring you make informed decisions. - Cost-Effective
Our services are transparently and competitively priced, and the peace of mind you gain is priceless.
Contact CLO Lawyers Today
If you’re part of a blended family, contact CLO Lawyers Toowoomba for assistance in creating an estate plan that addresses your family’s unique needs. Our experienced estate planning lawyers are here to help you navigate the complexities and create a plan that stands the test of time.
Wills for Blended Families FAQ: Frequently Asked Questions
A Mutual Will is an agreement between two individuals when they create their Wills together. This agreement specifies parts of the Wills that the parties commit not to change after the death of either of them.
A Testamentary Trust is an arrangement where a trustee (a person or a company) holds assets on behalf of beneficiaries. Unlike regular trusts, a Testamentary Trust is established within your Will. It takes effect after the will-maker has passed away.
This arrangement serves to safeguard your estate’s assets.
Separating control of the trust by the trustee from the benefit received by the beneficiaries, the testamentary trust provides protection of the assets from legal action or misuse. Another key advantage of a testamentary trust is tax minimisation for trust beneficiaries.
You are not obliged to include your former partner in your Will.
However, if you pass away without a Will and you’re separated but not divorced, your ex-spouse may still receive a share of your estate under the laws of intestacy. This also applies to a former de facto partner if the de facto relationship meets the criteria set out in the laws of intestacy.
Suppose your ex-partner is a beneficiary in your Will before separation. In that case, they will remain a beneficiary until you update your Will or get a divorce.
Getting a divorce or ending a civil partnership or a de facto relationship will automatically revoke any gift in a Will in favour of a former spouse.
In limited circumstances, a former partner who is a parent of your child under 18 can make a Family Provision Application against your estate.
Yes, a former spouse, de facto partner, and step-child, can contest your Will under certain circumstances.
For example, suppose your ex-partner was receiving financial support from you at the time of your death. In that case, they may have a legal basis to make a claim against your estate.
Suppose you wish to leave your share of the family home to your children without displacing your partner. In that case, as a first step, you must determine how the property is owned – solely, as joint tenants or tenants-in-common.
If you own the family home jointly, your share of the house automatically goes to your partner.
If you own your home solely in your name or as tenants-in-common, you can leave your interest in the home to your children but give your partner a life interest. This will allow your partner to reside in the property until death or some other appointed time. At that time, your children will inherit the home.
A simple right to reside in the home in favour of your partner is another option.
To provide your partner with income, you can create a trust, ensuring that your personal assets are held in trust for your partner’s benefit. The trust then pays out a pension to your partner during their lifetime, with the balance going to your children upon the death of your partner.
Life insurance can be a useful way of ensuring your partner or children receive a lump sum in the event of your death.
You can provide for your children with an immediate gift.
If you own property with a partner as joint tenants, you can change it to tenants in common so that your share will be left to your children.
A stepchild is not legally the child of a deceased person. Therefore, unless the contrary intention appears in your Will, a stepchild does not receive any interest in your estate that is left to a child.
Similarly, if you die without a Will, stepchildren cannot claim against an estate on an intestacy.
However, stepchildren are included as eligible applicants who may make a Family Provision Application under the Succession Act claiming a share of your estate.
No, you’re not required to leave anything to estranged adult children, but they may be able to contest your Will if you do not.
Adult children can make a Family Provision Application if they feel the provision (if any) made for them by the deceased is inadequate based on various factors.