One of the most common issues raised by our clients when making their Wills is their concern that when they leave their assets to their children, they will be passed on or owned by the spouse or partner of their child. Everyone can relate to the Gaylord Focker character and the scrutiny of his deranged father in law, Jack, played by Robert De Niro in Meet the Fockers. Wills and Estates Partner Angela Harry discusses this very common issue in the context of estate planning.
There is an old Irish saying:
“A son is a son until he takes a wife, a daughter is a daughter all of her life.”
Many families will relate to tensions created within families by the partner or spouse of family members. Parents separate and remarry, sons and daughters get married or have de facto partners who, for whatever reason, do not seem to get on with the family members! I’m sure many of you have experienced these interfamily problems firsthand and have a son or daughter estranged from the family, due to problems faced with the spouse or partner. This can get even more complicated when the spouse or partner has children from another relationship. Stories of a son or daughter having to ‘pick sides’ between their partner and their family are very common, with warring parties causing havoc at family get-togethers.
How do you provide for your child or children when you are concerned about their spouse or partner getting access to your hard won assets?
It is not an easy situation to manage. When your children marry or have a long-term de facto partner, it is normal for most couples to provide in their own Wills that when they die, their entire estate is left to their spouse. The thought of this happening for certain parents who do not trust or even despise their children’s spouse is often a burning issue. Although you cannot regulate what your children do with their own Wills and their own lives, you can structure your estate planning so that your assets are left to your children by way of a Testamentary Trust. A Testamentary Trust is simply a Trust set up in your Will which holds the assets on behalf of your child with certain conditions that you can determine by drafting your Will to suit your circumstances. These Testamentary Trusts are sometimes called Lineal Descendent Trusts or Bloodline Trusts which basically provide that the assets are to be kept within the family and cannot pass outside to non-blood related family. The whole issue of Testamentary Trusts is a very complicated area but it is certainly possible to draft an appropriate Testamentary Trust in a Will to ensure that your children are protected with provision made in relation to their spouse or de facto partner.
One of the most important things when setting up a Testamentary Trust to achieve this goal is to ensure that the trustees that you appoint to uphold and administer the Trust have some independence to ensure that the Trust is followed through. A common mistake in drafting a Testamentary Trust Will is to appoint the child themselves as trustee of their own Trust. Obviously, this leaves the administration of the Trust entirely to your son or daughter and they can be persuaded to act in certain ways by their spouse or other “advisors”. It is therefore very important to appoint an independent co-trustee or completely independent co-trustees to ensure that the terms of the Trust are honoured by your child. It is common to appoint professionals as executors and trustees in a Will. Quite often in our estate planning our clients appoint the senior partner or legal practice director of Attwood Marshall Lawyers and the family accountant. This ensures that not only is the Trust carried out in accordance with its provisions that are set out in the Will, you also have the benefit of the professional advice of an experienced lawyer and accountant in this area.
Whether the main aim of the Testamentary Trust is to ensure that your child or children cannot put the assets at risk in relation to their de facto partner or spouse, a Testamentary Trust is an excellent structure to generally protect the assets that you have left your children from all types of claims, including “predators and creditors“. The Testamentary Trust is also a good vehicle from a taxation perspective with great flexibility in distributing income to family members and appropriate beneficiaries.
As parents, you always want to do the best by your children and unfortunately, there are many instances of significant issues with spouses or partners of your children. This can create great disunity and stress within a family and at least you have the absolute right to determine how your assets are going to be dealt with after you die. Although these types of Testamentary Trusts can be challenged by your children in certain circumstances, the prospect of this happening can be ameliorated if proper care is taken in relation to your overall estate planning and the drafting of your Testamentary Trust Wills. Unfortunately, many people elect to make simple Wills (or even worse) do it yourself or Internet Wills which simply do not cut it when it comes to these types of issues. Attwood Marshall Lawyers offer a free 30-minute initial consultation to discuss your estate planning in relation to these important issues.
Please 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 to book your free 30 minutes estate planning review appointment with one of our dedicated Estate Planning lawyers.
We have a dedicated Wills and Estates team that practice exclusively in this complicated area.
