Step and blended families and Wills
I went to a wedding recently where the beautiful bride had seven grandparents. How is that possible? Well, her father’s parents attended, her step-father’s parents attended, her maternal grandfather and his wife attended and her maternal grandmother. As the proud father pointed out, having all the special people there to share the occasion was a reflection of modern families. It is estimated that one in five families is a step-family or blended family.
A step-family is defined as a couple containing one or more children, where at least one of whom is the step-child of one of the partners in the couple, and none of whom is the natural or adopted child of either member of the couple. A blended family is a couple containing two or more children, of whom at least one is the natural or adopted child of both members of the couple, and at least one is the step-child of either partner in the couple.
Planning for blended families is often not an easy task and may involve an emotionally difficult balancing act between the competing interests of two different families. This is why conversations about potential problems about combining families should happen prior to a commitment. The increasing complexity of family structures means that it is important to have a professionally drafted up-to-date Will which clearly expresses your wishes.
There are many options available for drafting a Will or preparing an estate plan for step or blended families. Below are some considerations to factor in when preparing a Will.
Firstly, you need to know how your assets are structured. The way you structure your assets during your lifetime significantly impacts on how your assets can be distributed as part of your estate.
For most couples, the main asset is their house, which can be owned solely, jointly (automatically transfers to the surviving owner) or as tenants in common (each owner has a separate share in the property).
Some couples with children from previous relationships prefer to keep their assets separate (e.g. keep bank accounts in separate names); while others prefer to own assets jointly or own some assets jointly and keep some separate.
Consideration should also be given in relation to who will benefit from your superannuation and life insurance. In relation to superannuation, it is important to be aware that you may be required to fill out a binding or non-binding nomination form to identify who will benefit and it may also require renewing after a certain amount of time (e.g. every 3 years).
How do you want to distribute your estate assets?
Every family is different. Therefore, the way in which you wish to distribute your estate assets will depend on your relationships and personal preferences. The following dot points provide some examples of how you might distribute your assets in a blended family situation. Keep in mind that these examples would need to be tailored to your needs.
- Leave your estate to your partner with no provision for biological or step-children.
- Leave your estate to your biological children to be shared equally.
- Provide for lump sum payments to be made to biological and step-children and the remainder to be left to your partner.
- Leave your estate to your partner with the understanding that they will divide the remainder of these assets evenly between your biological and step-children under their Will.
It is quite common for partners to set up their Wills like this when it involves mutual biological children. In this instance, usually both parents have equal interests in all the children and there is little risk that when the first parent dies the second parent will change his or her Will against the wishes of the deceased parent. This situation can often be different in blended families. It is important to understand there is no legal obligation for a partner to perpetuate your wishes under their Will.
It is also important to note that under the Testator's Family Maintenance Act 1912 a step-child is able to challenge the estate, even if the biological parent is deceased.
It is also important to give careful consideration to who will act as the executor of your estate. Issues around strained family relationships can be avoided by using an impartial professional, such as the Public Trustee to administer your estate.
Make sure your wishes are known. When family arrangements change, money is often one of the last things discussed. However, communicating honestly and openly with your family can minimise disputes that may occur later in relation to the distribution of your estate.
Talk to your partner about how you would like them to benefit from your estate and what you would like to leave to all of your children. This may include the distribution of personal legacy items such as wedding rings, photos and family heirlooms.
Have an open discussion with your partner about both of your expectations in relation to how assets are divided among the family. It is not uncommon for couples to have different views in relation to this, so it is important to arrive at a solution together.
You may also wish to discuss with children what your intentions are ahead of time so there are no surprises.
After discussing your intentions with your family, you should prepare a Will to ensure your wishes are carried out. Your Will should be reviewed regularly to ensure it reflects your current wishes and takes into account your current family situation which may change over time.
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