Blended family feud: Don’t let your estate be a bitter legacy
The Brady Bunch painted an idyllic picture of a step-family; unrelated siblings coming together to form one big happy household. This certainly can and does happen, but the reality is that as the number of step-families and blended families has increased, so has the number of dispute cases over deceased estates. In fact, according to a 2019 Australian Financial Review article, such cases have increased by a whopping 80% in the past decade or so.
Just to clarify our terms:
- A ‘blended family’ is one in which at least one child is the biological or adopted child of both partners, while at least one other child is the step-child of one of them.
- This is slightly different to a ‘step-family’, which contains at least one step-child but no biological or adopted child of both partners.
According to the 2016 Census, these two family types make up more than 10% of Australian families – and with a third of marriages now ending in divorce, it’s a percentage that’s likely to be higher when the results of the August 2021 Census are released.
One of the unfortunate legacies of a divorce – which only manifests itself years, sometimes decades later – is that children from the first marriage miss out when it comes to inheritance. Often the new spouse is unwilling to share the estate with children unrelated and perhaps even relatively unknown to them, and this is often made worse if the new spouse has their own children for whom they want as much as possible.
These situations tend to arise from a simple and understandable – but sometimes sadly mistaken – presumption: that when one half of a couple passes away, the other half will know best how to divvy up their estate according to their wishes (and will do so with the best intentions). It’s also attractively easy to simply pass on the entire estate to the surviving spouse, to distribute or hold on to until their own passing.
While this is undoubtedly the most straightforward option, it’s often not the most desirable one. The good news is that there are some relatively simple additional steps you can take to ensure your assets go to everyone they are intended for.
Steps to ensure your assets are distributed as intended
|Specify what goes to who||Especially where stepchildren are involved, an effective way to ensure nobody’s left out of the family inheritance is to make a clear provision for them in your estate plan.|
|Set up a trust||Putting assets into a family trust allows the surviving spouse to use and enjoy those assets (such as a house) until their own passing, after which point the assets are passed on to other beneficiaries.|
|Involve an unbiased third party||It can also be useful to nominate a neutral party, such as an independent trustee company, to act as executor of the estate. This can not only help avoid unnecessary conflict but ensure this often complex legal responsibility is carried out efficiently and professionally.|
|Mutual wills agreement||A fourth option is a ‘mutual wills agreement’, whereby both partners write their will at the same time alongside a legally binding contract that stipulates neither will can be changed without the other’s consent. This option is less popular because it can be difficult to get the balance right between giving the surviving partner enough freedom to enjoy and utilise the assets, but not such an excess of it that they may leave little behind by the time they pass away themselves.|
At the end of the day, everyone comes out a loser in litigation over an estate. Not only is the legal process time-consuming and stressful, it’s expensive and the legal costs will likely eat into the value of the estate.
It is therefore wise – especially in the context of a blended family or step-family – to think carefully about everyone to whom you would like to leave something, or who may have needs or expectations that are best catered for ahead of time. As always, it is recommended to get professional assistance in planning your estate and documenting your wishes – and to ensure your will continues to accurately reflect your wishes as your life and family circumstances evolve.