With the right approach and a little bit of planning, it is possible to create a Will that ensures your loved ones are taken care of and your wishes are carried out after you pass away.
Obviously, every family is different, and everything from relationship dynamics to assets can change over time. But even with this in mind, we provide a basic framework of strategies and key considerations to help you write your Will with a blended family in mind.
Challenges to Wills are, perhaps unsurprisingly, most common amongst blended families. Because, where there's a mix of past and present partners, biological and step-children, there's often a greater degree of competing interests. In these cases, the traditional scenario of the estate going to the surviving partner and then their children, is often inappropriate.
At best, it can create situations where children of the deceased would have to wait until the step-parent dies until inheriting, and at worst risks diminished assets or being cut out of the Will by this step-parent as time passes.
This can lead to a situation where someone in the family believes they’ve received an unfair distribution in the Will. Whether it’s the new partner, step-children or biological children, this person could then submit a ‘family provision application’ to the Supreme Court for an inheritance (or additional inheritance) claim from the deceased estate.
Such scenarios represent a costly, time consuming and stressful process. It’s what careful estate planning can avoid, and why advanced communication with family members whilst you're still alive is so important for blended families.
If you left everything you owned to your new partner, there is no guarantee that your children will receive anything from that partner when he or she dies. For example, your partner could remarry someone else and leave everything to their new spouse. Or, your partner and your children may become estranged after you die and your partner could exclude your children from their will.
In light of this risk, you need to consider what mechanisms you can put in place to ensure that, while your new partner is provided for, your children will also receive an inheritance (either immediately or eventually).
Again, this will depend largely on the size of your estate and the needs of each party. Below we cover some strategies to utilise in planning your estate with a blended family.
If you’ve remarried, choosing to provide your children with an immediate gift upon your death could avoid any delays or blockages in them receiving these assets. This could be covered by a life insurance policy, and represented by an immediate gift of real estate, money or other valuable family assets.
2. Testamentary trusts
Similarly, you could establish a trust to facilitate this direct transfer of assets to your children upon your death. This can provide for different family members at different times. Providing flexibility and asset distribution control to cover your children from previous relationships, while also ensuring that your current spouse and children are taken care of.
For example, you may create a trust for your children from your previous marriage, that only distributes assets after your current spouse and children have been taken care of. Alternatively, you could establish a testamentary trust which passes assets through future generations of your family line. Offering financial security to your family, as well as tax efficient benefits.
When considering these options with a blended family, there are a few more things to consider. Below, we bring these to your attention:
You should consider what assets you own jointly with your new partner. In particular, if you owned any real estate with your new partner as joint tenants (as opposed to tenants in common), then that asset will automatically pass to your new partner on your death regardless of what your will says.
The same will occur with any joint bank accounts. If you don't want these joint assets to pass to your new partner, then a trust, immediate gifts or life insurance could be especially relevant.
You must separately identify a beneficiary to receive your superannuation. This avoids automatic transfer to a family member at the discretion of the superannuation fund.
Whilst this might traditionally not cause issues if the funds are automatically transferred to your children’s mother, in a blended family this may flow past your biological children and into the hands of your new partner.
Where your superannuation represents a larger part of your estate, this may create issues with cutting your children out of a large distribution share.
Choosing your executor
Typically, an executor would be your spouse or child. They’ll essentially be your legal representative after you die- ensuring your wishes are carried out according to your Will.
This involves dealing with all estate lawyers, accountants and financial advisors, as well as paying bills and dealing with real estate. Given the complex dynamics and competing interests within a blended family, it can be a good idea to appoint a more neutral friend or professional for this role.
To Wrap Up
In summary, writing a Will for a blended family can be a complex process. In these scenarios, it's important to consider the legal structure of your family, the distribution of your assets and who will be the executor of your estate. You should also maintain clear communication with your family, to make your wishes clear and avoid future disputes.
How Safewill can help
Given the legal complexities and number of considerations involved with a blended family, it's important to seek support when writing your Will.
Safewill offers an easy, affordable and flexible way to do this- with support at each step of the way, and the flexibility to make easy updates at any point in time.