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Minimising the challenges of estate planning for blended families

Posted on September 19, 2018

If you, or someone you know, are in a second marriage then you need to contact us to discuss your estate plan.

The current divorce rate in Australia is about 40%. The majority of clients we see today are in their second marriage, often both with children from their first.

These blended family situations, whilst quite common, can pose obstacles of their own for clients and lawyers alike. This means that estate planning has had to become even more inventive to ensure a beneficial outcome for all is reached.

In most cases, husband and wife wish to provide for each other at first instance and then to their collective children. This may well be the intention of both parties but problems can arise when one of them dies. What is to stop the survivor of them from changing their Will and depriving the step-children of the marriage from inheriting? There are certain methods that may be adopted to prevent this from happening. This article serves to touch on a few of these methods.

Full Disclosure

There is no doubt that having a frank conversation with all family members assists in the process of estate planning. Generally speaking, if children are aware of what their parents’ wishes are before they pass away then there should be no surprises left behind. This is of particular importance where step-children are involved and there may be tension or animosity between step-siblings. A well thought out Will ensuring equality between all beneficiaries usually helps to stymie any proceedings being brought against the estate.

Mutual Wills

It is not uncommon for people in their second marriage to want to seek an added layer of protection for their respective children. Often people in these familial circumstances worry that when they pass away their spouse will immediately change their Will to the detriment of any children of theirs. The survivor is well within their rights to change their Will at any stage but only if there is not a Mutual Wills Agreement in place.

This type of agreement binds both parties (that is, husband and wife) so that neither can change the fundamental contents of the Will when one passes away. It is a way to ensure that when husband or wife dies, the Will is not altered in favour of any particular party. It is a valuable tool and provides a level of comfort to those in second marriages.

Life Interests

A life interest is created in a Will when one party gifts the other a beneficial interest in a particular asset (such as a house or shares) for as long as that person lives. This is commonly used when one party to the second marriage owns their own home and wants to leave this to his/her children upon passing away.

For example, a husband (in his Will) may give a life interest to his wife in the home in which they cohabitate. He owned this house prior to them marrying and wants to make sure that his children are bequeathed this property when he passes away. At the same time however, he does not want his children to force his wife out of the home when he dies. So he creates this life interest, allowing his wife to stay in the property for as long as she lives and upon her passing the property will be transferred to his children. In this way, a fair and equitable result for all is achieved.

This complex area of law requires careful consideration. It is important to invest time in exploring the options available as every situation is unique.

Please contact Lynch Meyer Lawyers to discuss this in further detail.

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