Gone are the days where Mum, Dad and 2.5 kids made up the average Australian family. Estate planning in the context of new family structures can be complex and requires suitably qualified legal and financial advice to navigate.
A “blended family” is a family in which one or both partners in the relationship have a child or children from a previous relationship. Careful estate planning should ensure that all of your intended beneficiaries are provided for when you die and that the potential for conflict within the family unit is minimised.
There is no one-fit solution when it comes to estate planning for the blended family. The dynamics and needs within families evolve and personal assets fluctuate. However, by identifying the potential issues that might arise within each family unit, and considering some options to address these, an effective estate plan can be achieved.
Competing interests – the common issue
The most typical issues faced by a Will-maker within a blended family are the competing interests of past and present partners, biological children and step-children. The Will-maker is likely to want to look after the current partner and also their own children from their previous relationship. There may also be children of the present relationship and children from the partner’s prior relationship to consider.
Traditionally, a Will for a married couple provides for the estate to go to the surviving partner in the first instance and then upon their death, to the children. This is unlikely to be appropriate for blended families – not only must the children of the deceased wait until the step-parent dies before inheriting, but there is a risk that the surviving partner may change their Will so that the deceased’s own children miss out. A further risk is that the assets may over time diminish, leaving little for the deceased’s children.
In some instances if inadequate provision is made from a deceased estate, an eligible beneficiary may be able to make a family provision claim, causing distress, delay and uncertainty during an already stressful time.
Things to consider
These are some important points worth remembering when considering estate planning for a blended family:
- Talk to your partner about your estate planning objectives.
- List all assets including those held separately and jointly.
- Consider everybody from the family including spouses, previous spouses, biological and step-children, and identify those whom you wish to benefit – preparing a family tree may be helpful.
- Contemplate if your choice of beneficiaries might leave open the potential for a family provision claim. You may need to discuss this with us.
- Carefully consider who to appoint as executors.
- Discuss your objectives with us so the relevant documents can be prepared.
- Ensure that you have binding death benefit nominations in place for your superannuation and life insurance policies.
- Review your Will and plans regularly, and immediately if your personal, health or financial circumstances significantly change.
- Seek legal assistance from Tetlow Legal. Apart from helping you consider the other advice above, we may have strategies and solutions that you may not have considered.
If you or someone you know wants more information on estate planning for a blended family, needs help or advice, please contact Emma Bragg or Brian Tetlow on (02) 6140 3263 or email [email protected].