“Love is lovelier, the second time around…” So says the beautiful old song. But the joy of finding love again and creating another family can quickly fade when the realities & pressures of the varying relationships are revealed. Multiple relationships equals multiple potential points of failure. Blended families can face complex estate-planning challenges, and issues can arise between spouses or between children and their spouses.
Over 70 percent of remarriages where children are involved result in divorce after less than six years. Add death and grief to the equation, and you can understand why challenges to deceased estates occur.
Blended families include children form previous relationships (step-children). They are growing quickly in number, but many people do not stop and think about the implications on children from previous relationships if they die without a Will. It is a dangerous assumption that the law will automatically protect your biological and step children, as numerous scenarios can preclude or reduce the amount that they receive after you die if you do not seek the counsel of an experienced Wills lawyer in Adelaide.
What Happens If You Die Without a Will?
South Australian law provides that, depending on the size of your estate, your children from previous relationships may receive nothing if you die intestate. For estates valued at less than $100,000, the entire estate goes to the surviving spouse or domestic partner unless a valid Will is in place. For larger estates, your spouse is entitled to the first $100,000, your personal belongings and half of the estate’s balance. Without litigation, at best your children will receive equal shares of the remaining balance (if any).
The term “blended family” refers to a cohabitation relationship in which one or both partners have children from previous relationships. People are often unaware, particularly in cases of unmarried couples and same-sex couples, about what they are legally entitled to when their partners die.
Having children from various relationships just adds to the confusion and often results in unintended consequences —even ex-spouses in some cases making claims against the estate. That is why you need the estate planning assistance of our seasoned estate planning team at the oldest law firm in South Australia.
At Genders & Partners, we will carefully study your family dynamics and help you work out a plan for the distribution of your estate that gives you peace of mind.
As more Australians get married more than once, estate planning issues involving blended families are becoming more common.
A blended family is where there are children from more than one relationship and they raise particular challenges for estate planning.
A typical example is where a man has children with his first wife, then re-marries a younger woman and has additional children with her.
Because marriage automatically revokes all prior Wills, his older children may be concerned that his new wife and her children may influence him to their advantage, at the expense of the older children’s inheritances.
This is a growth area for lawyers who work in the area of Family Provision claims, where Wills and estates are challenged in Court.
If you have a blended family, you need to exercise considerable caution when creating your Will and estate plan.
In my law practice I see lots of mistakes that people have made when it comes to estate planning, as well as some estate-planning strategies that could be used a lot more.
One of the most common mistakes is a misunderstanding of beneficiary nominations. Nowadays, many assets are transferred at death through superannuation funds, life insurance policies and annuities.
The owner of those investments or insurances (the person who set them up) will often have nominated a particular person(s) to receive the benefits of them, once the owner has died. This is a separate & binding contract which can bypass the owner’s legal Will.
Many people don’t appreciate how important it is to get the designations of those nominated beneficiaries right. I typically see beneficiary nominations where at the start of the marriage each spouse nominates the other as the sole nominated beneficiary for the super & the life insurance. Unfortunately most people forget to keep their binding nominations up to date. They forget to add the children, or only add some of them, leading to unintended consequences & heartache.
Similarly, if a child dies, most people would want that share to go to that child’s children, ie to the descendants, down the bloodline to the deceased child’s children. Sadly many people get this wrong, and end up accidentally disinheriting their grandchildren.
And you can’t necessarily rely on “common sense” to sort it out after your death. Unfortunately, there’s little consistency within the financial-services industry. If the insurance plan administrator or superannuation trustee doesn’t know how to handle it, your family will be the ones paying to sort it out.
Estate planning for your second or subsequent marriage is more of a challenge than it was the first time around.
If you have children from your first marriage, then those kids may have an entirely justified concern that their new step-parent could throw a big roadblock in the path of their inheritance.
When you got married again, it automatically revoked your previous Wills. If you don’t make a new Will after the latest marriage, the law of the State where you live will create a default Will for you, according to a statutory formula which probably won’t suit your intentions.
If you are in a second or subsequent marriage that involves different sets of children, then you have a blended family.
If you are planning to start a new life, and maybe buy a home with your present spouse, then this time around you really need to develop an integrate plan to ensure that all the important people in your life receive their fair share of your assets after you die. That’s what modern integrated estate planning does.
In most Australian jurisdictions, divorce will invalidate all gifts to an ex-spouse under a Will. However re-marriage will automatically revoke the entire earlier Will (with only rare exceptions).