How Should I Plan My Estate in a Blended Family?
Thinking about how to provide for your loved ones can already be a complicated process, but how does planning your estate change when you’re a part of a blended family? A blended family is defined as family where one or both partners have biological children from a previous relationship.
It is important to note that in Australia, inheritance law generally favours the surviving spouse, over biological children. This means that if you want to direct how your estate is inherited, you must think about how you wish to provide for your spouse, biological children and stepchildren, to ensure that inheritance laws don’t affect how your assets will pass on your death. These circumstances may include careful consideration where your biological children and partner may be estranged.
Considerations
Choice of Executor
When in a blended family, it is important to pay special attention as to who you appoint as the executor of your will.
The executor of your will shall undertake duties such as:
– Collecting and valuing assets
– Claiming life insurance
– Applying for a grant of probate
– Most importantly distributing your estate according to your will.
The alternative dynamic that may exist in a blended family means it is important that when choosing an executor, you choose a person who will be able to remain impartial should any disputes arise. Typically, this would mean selecting a non-family member who you can trust.
Consider a Mutual Will Agreement
A mutual will agreement is a contract between spouses, whereby each party agrees that they will not change their will without the other party’s consent, or the consent of their beneficiaries should their spouse die (usually their children). A mutual will agreement is a way of making sure that when a party dies, their surviving spouse will not make a new will, potentially cutting out the deceased spouse’s children from promised assets.
By signing a mutual will, both spouses agree that they will not change their will or, if they do, will still include the appropriate allocation of assets to the surviving spouse’s children. The disadvantage with this arrangement is the circumstances of the surviving spouse may change over time as well as the circumstances of both step, and biological children. Over time the will which seemed right when first signed may no longer be appropriate.
Consider a Life Interest
Creating a life interest in your will enables you to provide for your spouse to continue to live in your property after your death. This is known as a life tenancy. Simply, if you create a life interest for your surviving spouse this means they can still live in the family home until they die. After the death of the life tenant, he legal ownership of the property can be left to another person (such as a child).
A life interest is extremely flexible and primarily aims to ensure that your spouse can still use your property, however, will not legally own it. A well drafted will has the flexibility for the life tenant to sell the property and buy a new one, for example if the surviving spouse wishes to move to a retirement home. However, on death the new property will revert to your estate,
Immediate Gift
It can also be worth giving biological children their inheritance now rather than on your death.
Conclusion
Don’t leave your estate planning to chance. Wills are important, but with blended families, even more so. Your will gives you the opportunity to control how your assets are inherited, and who will inherit them.
If you need advice or would like to know more about estate planning, we can help. Contact Lord Commercial Lawyers on (03) 9600 0162, email us at info@lordlaw.com.au or fill out the form on this page.
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Lord Commercial Lawyers is a commercial and business-focused law firm based in the Melbourne CBD. We work with businesses and individuals to help them achieve their legal and commercial goals.
