What is a blended family?
As the incidence of blended families becomes increasingly common, the importance of making consideration for this in estate planning grows too. Blended families are expressed as one or both spouses/domestic partners (“spouses”) with children from pre-existing relationships.
In the 2021 census, twelve percent of families with dependent children are blended or step-families.[1] Up to one third of Australian marriages and de facto partnerships are second or third marriages or de facto partnerships.[2]
Blended families require the testator (the person making the Will) to balance the interests of their spouse with the interests of their children, and/or their partners children. Each blended family is structured differently, meaning there is no one size fits all solution for a Will.
[1] Australian Institute of Family Studies, Families and family composition (Report, August 2023) https://aifs.gov.au/research/facts-and-figures/families-and-family-composition#:~:text=As%20at%20the%202021%20Census,couple%20families%20with%20dependent%20children.
[2] Better Health Channel (Victorian State Government) Relationships – remarriage and re-partnering (Web page, 1 March 2022) https://www.betterhealth.vic.gov.au/health/healthyliving/Relationships-remarriage.
Obligations
Whilst you can leave your estate to anyone you choose, a spouse, child or dependent can contest your Will.[1]
The Court will determine if these eligible claimants are entitled and if they fall into one of the categories. Generally, a spouse includes a de facto partner living with you as a couple on a genuine domestic basis for a continuous period of two years ending on your death.[2] Additionally, a stepchild or adopted child can also make a claim on your estate if they are not provided for.
[1] Succession Act 1981 (Qld) s 41(2) (‘Succession Act’).
[2] Succession Act (n 3) s 5AA.
So, how do you protect your children’s interests in a blended family, when you could be obligated to provide for your spouse and stepchildren?
Testamentary Trust Will
One option is a testamentary trust will. A testamentary trust allows the testator to put their assets in testamentary trusts for the intended beneficiaries.
This makes it easier for the intended beneficiary to receive their gift and minimises disputes. A testamentary trust will can also include an independent trustee to distribute the assets – again, to minimise disputes.
Mutual Will
A mutual will is essentially a contract to make a will, thus creating a binding agreement between spouses. Mutual wills occur when both parties consent to leave their estate to their surviving spouse, ensuring that all beneficiaries (usually a child or children of both parties, including those from previous relationships) receive a division of the estate property.
Mutual wills can be either verbal or in writing. We strongly recommend mutual in writing over a verbal agreement so there is no confusion about the contract’s existence.
A spouse who has made a mutual will cannot revoke it or change the beneficiaries or proportions without the consent of their spouse. This means no substantial changes can be made to a mutual will after the death of the first spouse. Divorce will release a party from any obligation under an agreement for mutual wills.
The benefit of a mutual will is your spouse cannot then change their will after you pass away removing the gifts to your children. It is essential that you let your children know if you have made mutual wills as they are the ones who will enforce the agreement if your spouse does not honour the agreement.
The doctrine of mutual wills is complex and involves both contract law and equity; therefore it is essential to source experienced and adept advice from a legal professional.
Important Considerations
The ability to contest. As identified above, spouses, children and dependents can contest your will. There is no way to prevent a claim, however our estate litigation lawyers can assist in defending a claim.
Choosing executors. An executor is the person responsible for administrating your estate and distributing your assets to your beneficiaries. In a blended family, it is important to choose executors that will be responsible and minimise conflict. Executors can be family members or an impartial person.
Not all assets can be included in a Will. Joint assets such as joint bank accounts and property held as joint tenants automatically pass to the surviving spouse through the rules of survivorship. This means your children cannot receive their entitlement until after the surviving spouse passes away. Greenhalgh Pickard can provide individualised property law and estate planning advice to safeguard your children’s inheritance.
Superannuation and life insurance are distributed in accordance with death benefit nominations, and do not always fall into the estate. We can provide advice about how to distribute these assets, including tax considerations.
Additionally, assets held by trusts and companies are distributed in accordance with the trust deed or company constitution and are not appropriate to include in a Will.
Every family is unique. It is important to remember that every couple and every family is unique. Each family operates differently and there are many diverse family types in Australia. By getting tailored and individualised advice you can feel confident in your estate plan and protect your children’s inheritance in a blended family situation.
Contact Us
At Greenhalgh Pickard we have experienced Solicitors that can assist you in all areas of Succession Law. Contact us today for a no obligation free initial consultation for your Estate Planning.
Disclaimer:
The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation.
Greenhalgh Pickard’s Estates Team
