Estate Planning for Blended Families
Blended families come in all shapes and sizes. One thing they have in common however are the unique challenges they present in terms of estate planning.
Frequently, the couple making their wills want to provide a benefit for not only their partner, but also for each of their collective children. This seems simple enough on the face of it, however in reality, there are a number of risks that require careful explanation and consideration by a legal professional.
The principal risks are:
- The couple not properly understanding which assets fall within the parameters of their Will and
- The couple not properly understanding the extent to which assets can be controlled
To minimise the risk that a testators wishes will not be achieved, it is essential that advice is obtained from a solicitors specialising in Wills and Estate Law.
FAQ's
Common estate planning tools for blended families include:
- Simple Wills
- Mutual Wills
- Testamentary Trusts
- Life interests
Whether a simple Will, mutual Will, Testamentary Trust or Life interest is preferable will depend on your unique circumstances. To determine which option will be best for you, it is important that you talk with an inexperienced Wills and Estate lawyer.
In mutual Wills, each member of the couple agrees not to revoke their Will without the consent of their partner. This means that following the death of one member of the couple, the surviving spouse will not be able to change the substantive clauses of their Will.
While mutual Wills create certainty, they are extremely inflexible and not often recommended for clients.
Life interests are most commonly used where the family home is the primary asset of the estate.
If the property is owned solely by one member of the couple, or is owned by way of a tenancy in common, then the testator will be able to leave their share of the property to their children, but at the same time, provide their spouse with the right to live in the property for a period of time. Usually, when the surviving spouse dies or ceases to live in the property, the life interest ceases to exist.
The primary purpose of a testamentary trust in practical terms is to retain estate assets within the estate on trust for the beneficiaries for a prolonged period of time. Usually, the trustee will have a discretion as to when the trust income and/or assets will be distributed, and to whom.
Testamentary trusts may be attractive due to taxation and asset protection benefits.
