If you’re blending a family, you need to make sure you can leave your estate to particular beneficiaries in the way that you intend
If you and your spouse have children from previous relationships, you need to be aware of the legal issues surrounding your Will and more particularly how to protect your children’s rights to inherit your estate.
What are the challenges in making Wills for blended families?
In a ‘conventional relationship’, a standard Will is often prepared and the Will-maker leaves their Estate to their spouse. If you take a moment to ponder this, you may get a sense of how Wills for blended families can cause problems. If one spouse was previously married to a person who died, the Will-maker may have intended that their estate would be inherited by the surviving spouse and then the children of that first marriage. If the surviving spouse remarries and dies, without proper estate planning, there’s a chance that the estate is inherited by the new spouse or even the new spouse’s children. So the estate may be divided amongst those who have no connection with the first spouse. This represents a difficult issue in estate planning.
To illustrate the point, here is an example:
Harry and Jean met, married and had two children together – Frederick and Margaret. Many years later, Harry and Jean divorced. The Wills they made when they were married became invalid at the date the divorce was finalised.
Jean then started a new relationship with Steven, and sometime later, they decided to marry. Steven has two adult children from a previous relationship.
Steven and Jean want to make sure that if either of them pass away, the survivor of the two of them will be financially secure. But they also want to ensure that their respective children will be looked after.
Steven and Jean consider Mutual Wills as an option.
What is a Mutual Wills contract?
Mutual Wills may be used as an estate planning tool where both Will-makers have children from previous relationships.
A Mutual Wills contract is an agreement between the Will-makers that they will give their deceased estates in a particular way to particular beneficiaries, which can help ensure that both spouses’ children are accommodated.
In most cases, there’s a contractual obligation on both Will-makers to keep their Mutual Wills in place and specify that neither Will can be revoked or changed without the other’s express written consent. If one party to a Mutual Wills contract dies, the other party is not be permitted to prepare a new Will – even if they enter into a new relationship.
If the Mutual Will contract is breached, an affected party may have grounds to seek damages or specific performance.
What are the potential issues with Mutual Wills?
A potential issue with Mutual Wills is illustrated in this example:
A husband and wife, each with children from previous relationships, decide to enter into a Mutual Wills contract. The wife dies.
Some years later, the husband re-partnered and he and his new partner had a daughter together. However, the Mutual Wills he executed many years before with his now deceased wife stops him from executing a subsequent Will to include his new partner and child as beneficiaries of his Estate.
In particular situations, Mutual Wills can be an effective estate planning strategy for blended families. However, they may at times cause difficulties due to their inflexibility in accommodating subsequent life events, such as a new marriage and/or domestic partnership and more children.
It may be appropriate to consider other estate planning options to help protect your assets for your children, such as:
- A life interest clause in a Will
- An inter-vivos trust
- Changing property ownership arrangements from joint tenants to a tenancy in common
How we can help
Estate planning and Wills for blended families should be carefully approached, with all possible scenarios considered. It’s important to find the best options for your circumstances. Our experienced estate lawyers will work with you to understand your wishes, identify the risks and workshop the possible solutions. We can advise you on a range of estate planning strategies appropriate to your circumstances.
This article was written by Wills & Estate Lawyer, Hayley Najim.
DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can receive from marshalls+dent+wilmoth and other relevant experts.