If you’re in the middle of the estate planning process, having a blended family can add a lot more complexity than you were prepared for. Everything from your beneficiaries to choice of executor will require much more thought, and extra care will need to be taken so no one feels excluded.We spoke to Katerina Peiros from Hartwell Legal about the issues that might pop up when determining how your family will be provided for — as well as some pathways you might want to consider to help keep the peace.
First of all, what is a blended family?
These days, families can look a lot more diverse than they used to. Marriages often end due to death or divorce, and many people enter new relationships together with the children from previous ones. If these new relationships result in more children, the picture can get even more complicated. Blended families can take many forms, including:
A divorcee with kids who marries another divorcee with kids
Someone with children who marries someone without children
A widower with children who goes on to remarry
What are some of the problems that might arise?
One potential issue is children from your previous marriage feeling left out when your assets are distributed. This might be because there wasn’t enough in your estate to provide for everyone, or it could be because you wanted your assets to pass to your spouse before going to your children and things hit a snag along the way.For example, say you pass away and leave behind a spouse, a step-child, and the children from your previous marriage. While you were alive, you and your spouse might have agreed that when one of you dies, their assets would pass to the surviving partner, and then to all your children upon that partner’s death.But there’s always the possibility that your spouse’s relationship with your children might cool a little bit, if not completely sour, now that you’re not around. And if there’s enough discord, your spouse might eventually go to a lawyer and ask to have your children written out of the Will.
One way to reduce the likelihood of this happening is by having mutual Wills drawn up while you and your spouse are both alive. If done correctly, this can prevent the surviving spouse from creating a new Will that runs roughshod over the other’s wishes.Just keep in mind:
It’s not enough for you and your spouse to draw up two similar Wills — there needs to be sufficient evidence that they are mutual Wills. This usually means you have both entered a legally binding agreement not to change or revoke the terms of the Will.
The Wills should be reviewed regularly to make sure they still reflect you and your spouse’s wishes. If the Wills need to be amended, this should be done with the consent of all parties and properly formalised.
The Wills should be drafted with help from a lawyer to make sure your Will conforms to legal requirements and is free of any ambiguities that could lead to disputes.
Relying on a life interest to provide for everyone
Many blended families also rely on something called a ‘life interest’ to provide for both their surviving spouse and their children, albeit in different ways. This is most commonly used when deciding what to do with the family home. Typically, a trust is created in which ownership of the deceased’s property will pass to their children on the condition that the surviving spouse is allowed to occupy it for the remainder of their life.Arrangements like this may be useful, but there are a few things all parties will need to be aware of. For starters, there’s the question of who will maintain the property — the children who own it (but do not reside in it) or the spouse who is residing in it (but does not own it and may also be too feeble to put in the work). And there might be certain tax and social security implications to think about too.Having a blended family can make estate planning quite stressful, but there are certainly options to help smooth out the process.
For advice tailored to your needs, consider speaking to the team at My Fortress.
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