Blended Family? – Proper Estate Planning is Essential

More and more families today are ‘blended’ – that is, made up of two partners with children from previous marriages or with previous partners. The challenge with blended families and estates is ensuring that assets are equally or fairly divided. This post looks at some of the most important aspects to consider in estate planning if you form part of a blended family.

Family Feud

It is sad but true that even the closest families can end up in Court over inheritance. With the rise in property value and superannuation, even moderately wealthy families can amass millions in inheritance. As a result, leaving a DIY Will behind in a blended family can be dangerous for family harmony. Only expert solicitors can navigate the challenging waters of crafting a Will for an individual with a surviving spouse and children from a previous marriage to ensure that the distribution of assets is fair. DIY Will kits are designed with the average nuclear family in mind and is intended to be used by those with very straightforward assets. Even with some legal advice or guidance on will drafting, estate planning for a blended family is exceptionally difficult, and should be carried out by a qualified solicitor.

Who gets what?

A 2015 study by QUT, ‘Having the Last Word? Will making and contestation in Australia’ unveiled that most people making a Will in a blended family reported that they excluded or gave a smaller share to step-children. However, many fear that doing so could lead to the Will being contested.

Let’s take an example of a blended family to demonstrate some of the difficulties that may occur in terms of determining who gets what in a blended family and how this can be guaranteed in your Will.

EXAMPLE:

David and Ann have three sons between them. David has two sons from a previous marriage and Ann has one. For the last twenty years, David has had very little contact with one of his sons, Sean. He and Ann are concerned about whether Sean is entitled to an equal share in their estates as the other two sons who they see all the time. However, if they decide to include Sean equally in their Wills, they are concerned about this might affect the relationship they have with their sons. There is also the issue if, for examples, Ann dies first and David remarries and has more children, Ann’s son's share in her estate could be heavily diluted. Another issue is whether they should take into account each of their son’s financial situation, and whether they are married or have children of their own to care for.

A top tip in this situation is instead of punishing those you want to receive less, frame unequal distribution as ‘rewarding’ those you believe deserve more. One option for doing this is to give part of your estate away through gifts in you Will, such as bequests of specific property. You could then distribute your residual estate equally. This kind of estate planning does, however, require the skill of a specialist solicitor to ensure the Will is ‘watertight’ and less likely to be contested. It may be useful to include a signed statement of intention with your Will such that if the Will is contested, there is a clear statement of your intentions. Your solicitor can assist you in drafting your statement of intentions alongside your Will.

Testamentary trusts

A testamentary trust can be a useful tool for blended families. You can establish a testamentary trust in your Will which will be activated after death. Such a testamentary trust can be used to hold property, investments, and other assets. By using a testamentary trust, you can give a life interest to your surviving spouse in relation to all or part of your estate, and if your spouse also dies or remarries, the remainder of your estate can pass to your children. This can also be a useful tool if you have a blended family and only wish for your biological children to inherit from your estate. However, you should be aware that if this is challenged in Court by your spouse, there is a high likelihood the challenge will succeed. In order to minimise this situation arising, after carefully drafting your Will and testamentary trust you should discuss your wishes with your family.

Insurance Bonds

Insurance bonds are also a means of providing for particular beneficiaries, such as your biological children or children from a previous marriage. Insurance bonds are separate to your Will and do not pass through the probate system to form part of your estate.

Each of these suggested methods requires careful drafting from a solicitor who is an expert in the area of Wills. At Szabo & Associates Solicitors, we have years of experience in dealing with blended family estates and can help you and your family with estate planning matters. We strive to ensure that your estate will be distributed in line with your wishes and intentions. Only solicitors that are skilled in drafting Wills and understand supplementary measures that can be taken to ensure your Will is properly enacted can give you the peace of mind you need concerning estate matters. Contact our specialist solicitors today to discuss the various tools for estate planning which may be of use to you. In addition to drafting a Will, we can assist you in setting up a trust or provide you with advice on any aspect of estate planning. We also offer legal advice and representation should you ever need to contest or defend a Will.

Contact our Wills Solicitors Sydney & NSW

If you are part of a blended family and would like to discuss estate planning or making a Will, then contact Szabo & Associates, Solicitors today. Our expert solicitors can advise you on a wide range of legal matters, including estate planning, and contesting, making or updating a Will. Please contact George Szabo today on (02) 9281-5088 or fill in our online enquiry form.