Attwood Marshall Lawyers Legal Practice Director Jeff Garrett joins Robyn Hyland for ‘Law Talks’ on Radio 4CRB to explain why understanding your family “make-up” is so imperative when making your Will and your overall estate planning.
Introduction
The Brady Bunch family is the quintessential blended family icon. When people refer to the Brady Bunch family, they are referring to a blended family where the husband and wife, who may be on their second or third marriage, create a home bringing with them children from a previous relationship.
With one-third of Australian marriages and de facto partnerships forming as second marriages or de facto relationships, often with children from a previous relationship, many Australians are living as part of a blended family.
The Brady Bunch series and its many spin-offs showcased the awkward adjustments and rivalries between step-siblings, stepparents and the usual issues blended families often face. What the show failed to explore is what can happen in blended family scenarios when one spouse dies.
If Mike Brady died, would Carol have ensured Greg, Peter and Bobby got their share of his estate? Well, in the PG-rated world of the Brady Bunch, Carol would have likely looked after Mike’s three sons and ensured they inherited what was rightfully theirs. In the real world, these situations can be much more complex and contentious.
The sad reality is that the surviving parent in these scenarios quite often changes their Will after the death of their partner and excludes the deceased partner’s children from their estate.
Blended families and proper safeguards
In an idyllic world, when blended families are created, the parents treat their new spouses’ children as if they were their own and everyone gets along well.
In reality, that is not always the case. Many families do not get along, whether it is children unable to connect with their parent’s new partner, siblings, or vice versa.
In families where there is already conflict, these issues are often exacerbated when one spouse suddenly passes away.
Many people put off doing their Will and estate plan, but in the blended family scenario these documents are incredibly important. In the excitement of a new relationship, couples often trust each other implicitly and believe their new partner will always have their best interests at heart and will take care of their children if something unexpected happens.
A lot can change when one person dies. The surviving spouse can eventually re-partner and relationships within the family unit can break down.
The best way to safeguard your family’s future and protect your assets is to create a proper estate plan that considers your unique family make-up and deals with all your assets, including non-estate assets, how they are owned, and who they are to be left to after you die.
Jointly owned assets fall outside of your Will
When two people come together and form a blended family, if they purchase a home together, they will likely purchase the home as joint tenants. For most couples, their wealth is tied up in the family home. Many couples are unaware that this means, upon death, their share of the property will automatically pass to the surviving tenant. It does not matter if you make provision for your children from a previous relationship in your Will to receive your share of the property, the gift will fail as jointly owned assets cannot be gifted in a Will.
Other assets that fall outside of the estate and cannot be gifted in a Will include:
- Superannuation
- Life Insurance / Death Benefits
- Assets held in family trusts or owned by companies
- Joint bank accounts / jointly owned shares
Each of these assets need to be dealt with separately as part of the estate planning process.
There are several different strategies that blended families can look at to achieve their estate planning goals which may include executing mutual Wills, severing a joint, or creating a testamentary trust.
Read more: Jointly owned assets and estate planning
Which Will best suits a blended family
The Simple Will
A Simple Will is unsuitable for blended families.
A Simple Will, or basic Will, is a relevantly short Will that usually leaves the whole of the estate to your spouse or partner, or if there is no spouse or partner to accommodate, then leaves the estate split equally to the children (from both sides in a blended family).
A Simple Will nominates an executor, minimal beneficiaries, and can identify any guardians to minor children (if applicable). It can also include instructions about body disposal and funeral wishes.
Anyone in a blended family who completes a simple Will leaving their entire estate to their partner, with the intention that when the surviving spouse dies their children will eventually receive their share of their parent’s estate, is taking a huge risk.
It is common for many couples to have these types of arrangements, which may be suitable for the typical nuclear family, however, in the blended family scenario, upon the passing of the first spouse, the surviving spouse who has just inherited their entire estate, goes on to update their Will leaving their assets to their own children, disinheriting their stepchildren from ever receiving a benefit from their parent’s estate.
Simple Wills cannot tackle the many issues that can arise in blended families.
The Mutual Will
A mutual Will is a contractual type of Will where both parties agree to the Will and are bound by the agreement, ensuring they cannot change the Will after the other dies. Mutual Wills can be suitable in certain circumstances; however, they must be carefully drafted by an experienced estate planning lawyer who knows what they are doing.
A mutual Will allows for spouses to provide for each other as well as for children from any previous relationships. By ensuring the surviving spouse cannot change the Will after one spouse dies, the deceased’s children’s interest in the estate remains protected.
Most lawyers will not recommend making a mutual Will. There are alternative options that are better suited to protect blended families, including severing a joint tenancy on jointly owned property and changing the property ownership to “tenants in common”. Utilising this strategy allows each spouse to deal with their share of the property and leave it in their own Will to their chosen beneficiaries.
If spouses would like to ensure that the surviving spouse still as a right to remain in the family home for the rest of their life before their children are able to redeem their share of the estate, they may choose to create a right of occupation in the Will. Once the right of occupation expires, the deceased’s share of the property is then gifted to the intended beneficiaries.
Read more: What are “Mutual Wills”?
Reciprocal Wills
Mutual Wills and Reciprocal Wills often get confused. Unlike mutual Wills, Reciprocal Wills are created separately; however, they are identical in that they contain reciprocal provisions.
A Reciprocal Will has no contractual obligations preventing a spouse from changing their Will once their partner passes away.
Testamentary Trust Wills
A Testamentary Trust Will is a more complex document that allows the testator to establish a trust from their estate. The terms of the trust are set out in the Will.
When the Will-maker passes away, their estate will fall into the testamentary trust, to be managed by the trustee for the benefit of the beneficiaries.
The trustee will decide how the assets will be distributed and will remain in control of the assets.
Testamentary trusts can provide protection in a blended family scenario, to isolate certain assets and ensure someone independent is responsible for distributing the benefits of those assets to the beneficiaries.
Keep it up to date
There are many life events that should trigger someone to review their estate plan and update their Will. Some of the key events include marriage, divorce, and the birth of a child.
If you have drafted a Will or Enduring Power of Attorney and failed to update it upon a significant life event, such as separating from your partner, it could mean that your former partner will inherit everything if you suddenly pass away.
It is important to remember that if you have separated from someone, but not yet finalised your divorce, in the eyes of the law that person is still your spouse. Which means, if something unexpected happened and you died, they would likely inherit a share of your estate.
If you have appointed your ex as an attorney in an Enduring Power of Attorney document and failed to revoke the document, if you suddenly lose mental capacity then your ex will be able to make the most powerful decisions in your life including controlling your finances, making personal and health-related decisions.
Review your Will and other estate planning documents at least every three years, or whenever something significant changes in your life.
Attwood Marshall Lawyers – helping you plan for the future and preserve your wishes
Everyone’s estate planning objectives are different and you should never assume that a simple Will is going to protect your family and your assets.
There is a myriad of complexities that can arise for people in second marriages and blended families and obtaining trusted advice from an experienced estate planning lawyer is the first step in ensuring your testamentary wishes can be fulfilled and any children from previous relationships will be looked after.
Attwood Marshall Lawyers have a dedicated team of lawyers that practice exclusively in Succession Law and estate planning. Our team offer their skills and experience to ensure our client’s wealth that they have built up over their life ends up with who they intend it to.
To understand what documents you may need to put in place for your estate plan, contact 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.
You can also make an appointment with our estate planning lawyers online via our booking app. Our lawyers are available to meet with you at any of our conveniently located offices at Coolangatta, Robina Town Centre, Kingscliff, Brisbane, Sydney, and Melbourne.
