Attwood Marshall Lawyers Wills and Estates Lawyer Natalie Comerford delves into the intricacies of when a couple can’t agree on how to divide their assets in their Wills or who should have guardianship of minor children if both parents were to pass away.
Couples often find themselves at a crossroads when contemplating what happens to their assets after they pass away, and deciding who would assume guardianship of their children. These decisions can be daunting for any individual, but they become even more complex when a couple holds differing perspectives.
The sensitive issue of guardianship for young children needs careful consideration and discussion. When both parents have different ideas about who should take on the role of guardian in the unfortunate event both parents die, it can lead to disagreements and challenges.
Estate planning may feel at times akin to untangling a spaghetti mess, given the increased complexity of many family situations amid a rise in blended families – i.e. a ‘Brady Bunch’ family that includes a husband and wife who may be on their second or third marriage and who bring with them children from their previous relationships.
However, estate planning shouldn’t be seen as a daunting task – it’s about making sure your wishes get the spotlight they deserve. We spend our lives building wealth, and there comes a time when we naturally start thinking about how that wealth can be transferred down to our loved ones in the future.
The first batch of the Baby Boomers will start reaching their statistical age of death at the end of this decade, and huge intergenerational change is expected to follow. In fact, research company McCrindle recently estimated that in Australia, Generation X is set to inherit $3.5 trillion from their parents by 2050.
One source of argument between couples may arise from the desire to support their descendants in achieving “the great Australian dream” of property ownership. Almost 75 per cent of Gen X-ers own their own home or are currently paying off a mortgage, according to Melbourne University’s 2019 Household, Income and Labour Dynamics in Australia survey.
With the challenges of high house prices, increasing interest rates, and growing living costs, some individuals may contemplate transferring part of their inheritance while still alive. However, disagreements can arise when one partner is concerned about retirement expenses, the need for aged care in the future, or uncertainties surrounding if the pension or superannuation benefits will be sufficient to cover their life expectancy.
Whether couples are on the same page or not about their estate plan, there are strategies that can be discussed with an experienced estate planning lawyer to help ensure that everyone’s wishes can be fulfilled.
There’s no one size fits all solution for compromising on joint assets. It’s perfectly normal for couples to have differing opinions on asset distribution. Seeking legal guidance is a prudent step to help navigate the complexities and emotional uncertainties involved.
What if we don’t see eye to eye?
If you ever worry that your partner may have different ideas about who gets what when you’re gone, or if you simply don’t agree on this, what steps can you take?
Remember, you’re not alone in this. As estate planning lawyers, we encounter these situations every day. Your concerns, even if they feel private, are shared by many couples facing the same decisions. It’s perfectly fine not to have identical thoughts, and it’s entirely natural for couples to have differing opinions on what happens to your wealth after you pass away, or who will look after dependent children.
Here are some tips on getting through a thorny disagreement on this topic:
- Have an open and honest conversation, listen to each other and identify what is important to the other party.
- For guardianship discussions, identify priorities and concerns and discuss the qualities and attributes you both value in a guardian for your children. Identify any concerns or reservations you may have about each other’s preferred choices.
- Seek professional guidance: don’t be afraid to loop in experts as outside help – neutral third parties like lawyers, accountants, or financial advisors can facilitate conversation and help identify solutions if you have different goals you want to achieve.
- Understand that legal obligations and moral obligations can be two different things. Just talking to an estate planner about your options can provide you with strategies that you may not know are available to you.
- It is not uncommon for parents to want to leave their estate in equal shares to their surviving children, assuming this is a fair distribution. But that is not always the case. We discussed this topic in greater detail in our blog titled “Making your Will and the guilt of giving – should you leave your estate to your children equally”.
Leaving your estate equally to children may seem like the moral thing to do, however there are many factors to consider when deciding who gets what, and an experienced estate planning lawyer can help you understand how your legal obligations may play out in your unique situation.
This insight can be extremely valuable when couples may have a different opinion about what is “fair”, or what their moral obligation to their children should be.
Gifting jointly owned assets – options to consider
Jointly owned property
Property that is owned as joint tenants cannot be gifted in someone’s Will. This is an asset that falls outside of the estate, and on the passing of one of the owners, will automatically pass to the surviving owner.
For couples who have different opinions as to who they want to inherit their share of a property, a discussion could be had about severing the joint tenancy, and creating tenants in common, so that each party can deal with their share of the asset in their Will, leaving it to whomever they choose.
Jointly-owned bank accounts
Just like jointly owned property, the balance of a joint bank account usually defaults to the surviving spouse. You cannot gift ‘your share’ of the joint account to another person.
If you wish to gift a certain amount of money to a particular person, we have strategies available to achieve this goal and the right strategy will depend on your personal circumstances. It is easy to achieve when you know what you’re doing but as we have seen with many cases in the past, getting this wrong can end up with litigation among expectant beneficiaries.
Superannuation
Superannuation is another one of those assets that requires unique advice to suit a person’s personal circumstances. Most people presume their super will pass to their next of kin upon their death, but this is not the case.
When considering who is going to receive your superannuation death benefits, it is important to understand what the law says in relation to these benefits. Under the Superannuation Industry (Supervision) Act 1993 (SIS Act) the recipient of a person’s death benefits depends on several factors:
- Binding Death Benefit Nomination (BDBN): If the deceased member has made a valid BDBN, the death benefits will be paid according to the nominations made in the BDBN.
- Non-Binding Death Benefit Nomination (Non-BDBN): If there is a non-binding nomination, the trustee of the superannuation fund has discretion in determining the distribution of the death benefits.
- Dependents: If there are dependents, such as a spouse, children, or financial dependents, they may be entitled to receive the death benefits.
- Legal Personal Representative: If there are no dependents or a valid BDBN, the death benefits may be paid to the legal personal representative of the deceased’s estate.
The taxation consequence of a person’s choice is often a compelling factor in this decision and like all other aspects of estate planning, each person’s circumstances are unique and what is right for one may not be for another.
Assets held in trust
It is easy to fall into the trap of wanting to give assets in a Will that are owned by a trust because in a lot of circumstances those trust assets can look and feel like your own. But heed our advice – it is vital to obtain legal advice so that you understand the specific provisions of the trust and the relevant laws and regulations of the applicable jurisdiction to prevent an administrative calamity that can be very costly and timely to sort out because a trust succession plan was not in place.
Understanding the intricacies of trusts is challenging for most people and we find most trustees obtain legal and financial advice when it comes to dealing with trust assets.
Attwood Marshall Lawyers – experts in Succession Law
At Attwood Marshall Lawyers, we offer a free 30-minute consultation to all estate planning clients to talk about the best estate planning strategies to suit your unique situation.
We have one of the most experienced Wills and Estates departments in the country, and our friendly team is passionate about helping people document their wishes to give them peace of mind about the future and their family’s financial security. The process does not have to be overwhelming and is simpler than you may realise (even if you are at loggerheads with your partner about who should inherit what).
If you would like some advice about how to structure your estate and ensure your wishes, and those of your partner, can be fulfilled, please call our Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071 anytime.
You can also make an appointment with any of our lawyers by visiting our website and using our online booking app. Our lawyers are available to meet with you at any of our conveniently located offices at Robina Town Centre, Coolangatta, Southport, Kingscliff, Brisbane, Sydney, and Melbourne.
