The traditional nuclear family of “Dad, Mum and the Kids” is far less common than it once was. The TV show modern family is typical of many modern families in our society – second marriages, blended families, same sex relationships and overseas adoption. These complicated family structures can lead to a myriad of issues for the estate planning lawyer.
Taking the characters of modern family, the following estate planning issues can be readily identified:
The Pritchett family
Jay Pritchett – an older man, with an ex wife (Dede) and a much younger trophy wife, Gloria Pritchett, two grown children (Claire and Mitchell) from his first marriage and two younger children—adopted son Manny (Gloria’s son) and infant son Fulgencio Joseph.
Jay owns a construction business which he runs with the help of his daughter Claire. Jay must balance the needs of his young family while providing for his older children, preserving the wealth he had built prior to meeting Gloria and ensuring that he has a business succession plan to hand over the family business to Claire, or at least exit the business as he nears retirement.
Assuming Jay has already separated his financial affairs from Dede, Jay should consider a modern estate plan incorporating testamentary trust provisions to allow him to provide in a tax effective way for his adult children and grandchildren in addition to his new family. Jay may also wish to consider putting a Financial Agreement in place with Gloria to protect their respective financial positions should they separate. The Financial Agreement should also include clauses as to their entitlements should one of them pass away. Finally, Jay should also ensure that his superannuation and life insurance are up to date, with necessary binding death benefit nominations in place to ensure that his estate plan is robust and meets his wishes.
Thought should also be given to Manny’s status – is he a step son or has Jay adopted him. Both scenarios have very different outcomes in terms of estate planning. Jay sees Manny as his son and it is likely that he will want to provide for him.
The Dunphy family
Claire Dunphy (Jay’s daughter) – is married to Phil Dunphy, a real estate agent. Claire and Phil have three children—Haley, Alex, and Luke. Haley is college-aged, Alex is in highschool and Luke is a tween. Phil works for himself and after being a stay-at-home mother for many years, Claire recently re-joined the workforce and works for Jay at Pritchett Closets & Blinds.
Being self employed Phil must ensure that his estate plan incorporates asset protection for his family if he is the subject of litigation in the course of his business. Claire and Phil would need to ensure that their children are well educated and left with a legacy, particularly if one of the children (such as Hayley) is a spend thrift. Having regard to these issues, wills incorporating testamentary trusts would also be suitable for Claire and Phil. Testamentary trusts for each of the children would allow each child tax benefits offer protection for their inheritances if one of the children makes a bad marriage choice or become bankrupt in the future.
The Pritchett-Tucker family
Mitchell Pritchett (Jay’s son) and his partner of eight years, Cameron “Cam” Tucker, have a young adopted daughter, Lily Tucker-Pritchett. Mitchell is a lawyer. Cam recently went back to work as a teacher. Mitchell and Cam hope to adopt a second child from overseas.
In terms of estate planning Mitchell and Cam must ensure that they deal effectively with their assets and provide for Lily. Again a testamentary trust would be ideal for the reasons set out above. Mitchell and Cam should also consider entering into a Financial Agreement under the Family Law Act to provide for the event they separate. This Agreement should also set out what is to happen with their assets if one of them die. The Family Law Act now allows this protection for same sex couples and it is an ideal way to ensure estate planning objectives are met.
Please ring our department manager Donna Tolley on direct telephone 07 5506 8241 or freecall 1800 621 071 or email firstname.lastname@example.org for further information on your estate planning needs. Please feel free to pass on our newsletter to any of your family, friends or colleagues who may wish to take advantage of this opportunity.