It is increasingly common for people to enter into new relationships and form combined or blended families. One or both partners may have children from a prior relationship.
If you have a combined or blended family, you may wish to consult with a lawyer to consider some estate planning strategies suited to your needs. When people enter into a second relationship, they often have separate assets. They may wish to provide some or all of those assets to their own children, rather than to their new partner and his or her children. There are laws of family provision that must be taken into account when estate planning in these circumstances.
A lawyer can help plan your estate in a manner that minimises the possibility of future estate litigation. Estate planning requires taking into account all potential competing claims for benefit from an estate. A lawyer can assist in identifying individuals who may have a claim against your estate and can recommend strategies for dealing with these claims in an appropriate manner. Sometimes these obligations may not initially be obvious. For example, in some situations you may have an obligation to provide for a former stepchild if the stepchild can demonstrate that you had a responsibility to provide for his or her maintenance and support. It is important to obtain legal advice specific to your situation.
There are a number of estate planning strategies that can be used when considering how to make adequate provisions for everyone. The obvious choice is to make adequate provision for everyone in the will itself. However, the value of the estate may be insufficient to accomplish this.
That’s where other estate planning tools can come into play. For example, it may be prudent to take out a life insurance policy in favour of particular beneficiaries. In addition, it may be advisable to make superannuation nominations in favour of your second partner or other current dependants in order to provide financial support, while leaving your estate to your own children.
Other estate planning strategies are more complex. One strategy involves creating a life interest. Commonly, the objective of a life estate is to ensure that the surviving spouse will have the benefit of a property or the residuary estate during his or her lifetime, and to ensure that the property or residuary estate will pass to the children of the will maker on the death of the surviving spouse. This means that a life interest can be used to permit the surviving partner to live in a particular property as their residence during their lifetime. In addition, a life interest can be used to provide the surviving spouse with a stream of income from the residuary estate during their lifetime, with the estate ultimately passing to the will maker’s children. Life estates can be a helpful estate planning tool in some situations. However, they may also be a source of tension between the surviving spouse and children.
Mutual wills are another estate planning tool. Each spouse agrees to make and maintain a will which provides primarily for the other person, but which also makes provision for both their own children and the children of their deceased partner. Mutual will agreements are particularly helpful where a couple’s assets have become merged over time. The surviving spouse inherits the deceased’s estate, but is bound by the mutual will agreement to maintain a will which is in favour of the children of the deceased partner to the extent specified in the agreement. These arrangements are legally enforceable.
There is a wide array of estate planning strategies. It is important to seek advice to understand how these tools can assist you in meeting the needs of your family. Every circumstance is different and it is important to obtain advice specific to your situation and objectives.