Like many matters in life, having a blended family adds an additional layer of complication to your estate planning. When considering the future of you children, step-children, your new spouse after your passing, careful consideration is paramount. It is therefore especially important to have professionally prepared documents in place to ensure you’re wishes are carried out. This article will outline some of the essential documents, processes and considerations to be made when planning for your family’s future.
Discussion with your partner
Prior to your appointment with a lawyer, we suggest that you and your spouse take the time to have a transparent conversation about what you want to achieve with your estate planning. Some of the things you may want to discuss include:
- What assets you each brought into the relationship?
- Will you continue to take care of each other’s children if their other parent also passes?
- What you want to happen to your body after you die?
- Specific gifts of sentimental value you want to ensure pass to a specific person?
- Anyone you wish to exclude from your Will and why?
Mutual Wills Deeds
One of the most common fears we hear from couples with a blended family is along the lines of
“My spouse and I have prepared Wills that provide for our children and step-children. What is stopping my spouse from making a new Will after I die that excludes my children, leaving my estate to their kids?”
To eliminate this apprehension, one way to resolve this issue is to enter into a Mutual Wills Deed. This deed provides that each party will not amend their Will, enter into any transactions, or do any other thing that will significantly diminish the shares that are contemplated in the deceased party’s Will. Alternatively, the deed may only relate to certain assets of the Will maker.
Right to reside
It is common in blended families for one spouse to enter the relationship owning a house and for the parties to make that their home, often with the title remaining in the name of the original purchaser. Although you might wish for this home to ultimately pass to your biological children, you likely also don’t want to require your spouse to find somewhere new to live after your passing. In this case, we can include in your Will a “Right to Reside” clause that allows for your spouse to live at the property until:
- Their death;
- They remarry or enter a de-facto relationship; or
- Vacate the premises for a specified period.
How else can you support those you leave?
If you wish to leave your estate to your children but still provide an income to aid your spouse for the remainder of their life, or vice versa, your estate planning can include a testamentary trust. This can provide upon your death, that certain assets be moved into a trust for the beneficiary to receive a steady income.
If the testamentary trust holds cash, the trust can distribute a fixed amount to your spouse at regular intervals to serve as an income. Upon their death, the residue of the trust can be passed to your children.
Alternatively, the trust can hold assets which produce an income, such as an investment property or shares, the income from which can be distributed to your spouse. The trust can contain a provision that states that your spouse has a right to the income from these assets until there death, upon which, the assets themselves pass to your children.
If you have an ex-partner that you wish to help take care of your minor children after your passing, a testamentary trust can also be helpful. By carefully constructing the trust, your executor can hold funds that are only to be used for the education and advancement of your children. The children’s surviving parent can purchase essential items for your children and be reimbursed from the trust upon your trustee’s approval.
Estranged children
Sometimes in blended family situations due to starting a new chapter of your life, relationships with children from past relationships can deteriorate to the point of estrangement. This can be the case with both minor and adult children. If you have become estranged from your children, you are not obligated to provide for them in your Will, however this comes with risks. The Family Provision Act 1972 (WA) sets out certain classes of people who can apply to the Supreme Court for a greater share of your estate. One of the classes of relatives that can do this are your children. The Court will consider the applicants situation when determining whether to grant an order. For example, financially stable independent adult child is much less likely to have a successful claim than a minor disabled child. Regardless of whether these children choose to pursue an action under the Family Provision Act, we often recommend, where possible, it is best to provide some sort of provision for them to prevent any headache for your loved ones. Unfortunately, nothing can prevent your estranged children from making a claim, but a professional well-drafted Will goes a long way to protect your estate.
There are also ways to have your assets held in structures that do not form part of your Willed estate and thus can not be the subject of a claim pursuant to the Family Provision Act. Some such ways are to hold assets in joint tenancy (eg real estate and bank accounts), utilise discretionary (family) trusts and use superannuation (either a pool fund or a Self-Managed Superannuation Fund).
Conclusion
Planning for the future of your blended family requires careful consideration of the unique matters brought about by the situation. Transparent communication between you and your partner is paramount to ensuring that not only the estate planning process occurs smoothly, but your documents operate correctly and cohesively following your passing. By using the tools outlined above, alongside other mechanisms, Lynn and Brown Lawyers can ensure that you have the best estate planning in place for your unique circumstances.
About the Authors: This article has been co-authored by Sam Richardson and Steven Brown. Sam undertook his studies at Murdoch University fresh out of high school in 2020 at 17 years old, keen to pursue and interesting and challenging career. Since November of 2022, he has been with Lynn and Brown as a clerk but following the conclusion of his studies, he will be staying with our Wills and Estates team as a Law Graduate. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.
