Estate planning for blended families can often pose significant challenges for clients and their lawyers.
When someone who has been living in a blended family environment dies, there is an increase in the potential for someone to challenge the Will (often referred to as contesting a Will). This is due to the competing interests for inheritance claims between your current partner, children of your current relationship, children of previous relationships and stepchildren.
What is a blended family?
A blended family is where one or both partners have child/children from a previous relationship. Blended families can create complexity in estate planning, as partners consider the intricate decisions about distributions and appointments due to the number of relationships involved.
Designing an estate plan for you
In all Australian States & Territories, rights are bestowed on partners, children and in most States, on stepchildren to claim on your estate if you have not provided for them.
The importance of estate planning cannot be underestimated. The laws are complex, however with the right planning, you can reduce the risk of a lengthy and costly estate claim.
Managing competing interests in blended family estate planning
Some couples choose to leave their inheritance all to each other. They usually mirror each other's Wills. This is done on the understanding between the partners that the survivor will provide an inheritance to their stepchildren when they subsequently die. This may happen, but there are no guarantees because the surviving partner can change their Will at any time.
It will be obvious that tension and worry when deciding between your desire to provide for your partner versus the needs of your children from your previous relationships.
This issue can often arise when considering disposal of the family home - there is an obligation to ensure the surviving spouse has accommodation along with a wish to ensure that the family home is preserved for the ultimate benefit of the Will-maker's children.
There are two common approaches that address this issue:
- Granting a life interest over the family home; or
- Allowing the partner a right to reside in the family home perhaps for a specified period.
You should get legal advice as to the best option for your circumstance.
Avoiding an estate claim and maintaining amicable relationships
Estate claims are relatively easy to commence and often the legal costs of them (which are typically very high) are funded by your estate, reducing the inheritance available and changing your intentions on who you wished to benefit.
A simple Will is not sufficient to address the problems of blended families but there are a number of strategies that can be adopted to minimise the risk of claim.
Importance of engaging a lawyer to draft your Will
We recommend that everyone over the age of 18 should make a valid Will, even if they do not have extensive assets to bequeath. Under Australian estate law, a person who dies without a will has no control over how their assets are distributed. For this reason, it is important that a lawyer is engaged to ensure all formalities required for a valid Will are fulfilled.
When someone dies without a Will, legislation in each state/territory determines the order that unpaid debts and taxes are settled, and then the formula by which the remaining assets of the estate are distributed to family members. The formula varies between states and territories but essentially benefits a spouse first, followed by any children and then more distant relatives. Estate disputes not only cost money, but they also often fracture families for generations.
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