Considerations For Estate Planning With A Blended Family
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When an existing parent becomes part of a blended family, it is natural for them to want to do what they can to protect their wealth and ensure their child(ren) will ultimately inherit the assets they brought with them to the new relationship. It is important, then, that certain considerations are made when a parent in a blended family undertakes estate planning.
Here are some important factors to consider.
Keep the lines of communication open
It is crucial that your spouse is aware of your intentions so that any concerns can be discussed and resolved through a plan that benefits both of you. If they are taken by surprise and feel that they were not appropriately provided for in your Will it may give rise to conflict and your Will possibly being challenged.
Your spouse may have their own children from a previous marriage and also want to ensure their personal assets are bequeathed to them,.y being transparent and honest you can avoid any misunderstandings, tension and disputes in the future.
Have a Will prepared
Around half of Australia’s adults do not have a Will. The best thing you can do to ensure your assets are inherited by your children is to have a Will prepared by a lawyer.
An estate planning lawyer can make recommendations based on your current situation and the desired distribution of your estate.
Establish a Testamentary Trust
If you’d like to protect certain assets so they can only benefit your children, you should consider establishing a Testamentary Trust. A Trust will allow you to set aside certain assets for your children while giving you the ability to financially support your spouse when you die.
Make provisions for your superannuation
As your superannuation typically does not form part of your estate, it will not be subject to a claim against your estate. You should review and update any existing binding death benefit nomination attached to your superannuation account(s) as well as any relevant life insurance policies or other financial assets. Without beneficiary designations, your financial assets could be distributed to unintended beneficiaries. If you are separated but not legally divorced and you have a new partner and/or child(ren) it is particularly important that you have made provision for your superannuation in your estate planning.
Provide your spouse with a life interest
Let’s say you have a new partner, as well as children from a previous relationship. You want your home to pass to your children but also want to make sure your partner has somewhere to live after you die. If you find yourself in this conundrum, you should ask your lawyer about providing your partner with a life interest through your Will.
A life interest will allow your partner to live in the property until they die or permanently vacate the property (or some other event). While they will have the exclusive right to use and occupy the property, they are not granted legal ownership. This means that when the life interest ends (as determined by your Will), the property will then pass to your children.
Put a contingency plan in place
Consider a Power of Attorney so you can appoint a family member whom you trust to make health, lifestyle and financial decisions on your behalf if you cannot. An Enduring Power of Attorney document is even more critical in blended families, mainly where adult children from a previous relationship exist and feel that they should make decisions on behalf of their parent.
Keep your will updated
Circumstances can change, so it is important that your estate planning is up to date. You may choose to update your Will to align with major life events, including marriage, birth, or divorce. At the very least, we recommend that you review your Will every 12 months and if anything has changed, and if anything has changed you can call our office for a free consultation with one of our estate planning lawyers.