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Estate Planning for Blended Families
"Yours, Mine and Ours" - Blended Family Considerations and Solutions
Blended families are common in today’s world. Blended families arise where one or both of the parties to the relationship (married or defacto) have children from a prior relationship. The parties to the relationship may also have children together. These relationships give rise to certain challenges and the need for extra considerations when making an estate plan.
Providing for your current partner and also protecting the interests of your children
Blended family situations give rise to the need to consider what mechanisms should be put in place to ensure that while your new partner is adequately provided for, the inheritance you wish to pass to your children is also protected. It is rarely as simple as being able to leave everything to your new partner and resting assured that they will make adequate provision for your children in the event that you pass away first.
There are various factors to consider in making a decision about the extent to which you want to make provision for a ‘new partner’ in the event of your death – particularly where there is also a need to make provision for children and other dependants as part of your estate plan. Some of those considerations include:
- The size of your estate;
- Whether you and your partner have joint assets (for example real estate and/or bank accounts) which will not form part of your estate and will automatically pass to your partner on your death, regardless of what your Will says. It may be that you need to consider whether it is appropriate for these assets to remain jointly held;
- Your partner’s needs – Are they financially dependent on you or are they able to support themselves? Will they have somewhere to live in the event of your death? Are they likely to re-partner following your death?
- The number of other people you need to provision for as part of your estate plan and the extent of their reliance upon you financially (including dependent children and/or step-children and non-dependent adult children and/or step-children);
- The nature of the relationships between your partner and children.
Estate Litigation Risks
The greatest percentage of Will challenges arise in blended family circumstances – most commonly between a Will-maker’s children from a prior relationship and his or her current partner.
‘Family Provision Claims’ (where a spouse, child or dependant of the Will-maker seeks greater provision from their estate) are extremely expensive to defend (resulting in estates being significantly eroded in legal costs) and often result in irreparable damage to family relationships.
Many of the risks of an estate claim can be significantly reduced with a comprehensive estate plan. This makes it extremely important to seek legal advice regarding the extent of provision you should make for your dependants and the strategies which can be implemented to minimise the success of a family provision claim. Proper thought, care and attention during the estate planning phase greatly increases the chance of your estate passing to your intended beneficiaries in line with your wishes.
Superannuation and Life Insurance Entitlements
Superannuation and life insurance entitlements do not automatically form part of your estate. Putting a Binding Death Benefit Nomination in place and maintaining this nomination will avoid the trustee of your superannuation fund having the discretion to decide who your superannuation entitlements are paid to and in what proportions. Similarly, a beneficiary nomination in respect of your life insurance entitlements secures the payment of these entitlements in accordance with your wishes.
Superannuation and life insurance entitlements often amount to a significant proportion of your estate. By not adequately addressing how your superannuation and life insurance entitlements are to be treated as part of your estate plan you risk them being paid out in a way that does not reflect your wishes – for example, you may wish for your children to receive the benefit of these entitlements, but in the absence of having put the necessary documents in place to achieve this, they may be paid to your new partner.
We are here to support and guide you.
Our experienced estate planning lawyers are able to assist you in navigating the challenges and complexities arising in blended family situations. We are also able to help you develop and implement strategies specific to your needs and which balance the competing interests of your partner, children and step-children.