With more and more families forming through remarriages, ensuring the protection of your children's inheritance becomes a crucial consideration for many blended families looking to prepare a Will and Enduring Power of Attorney. When endeavouring to balance the interests of two distinct (and sometimes, competing) family groups, it can be helpful to bear the following 7 practical considerations in mind:
1. Open Communication
In blended families, open communication is key. Make time to sit down with your spouse to discuss your shared financial goals and your individual wishes regarding the distribution of your assets (both if one of you were to pass away, or if both of you were to pass away). Encouraging transparency and understanding each party's needs and point of view can assist in avoiding misunderstandings in the future.
2. Draft a Comprehensive Will
Creating a legally sound and comprehensive Will is the foundation of estate planning. When blended families are involved, having a Will becomes even more critical to ensure your assets are distributed according to your wishes. Lawyers who practise exclusively in estate planning will be well-versed in the delicate balancing act between addressing the needs of both your spouse and your biological children (and ways that this may practically be achieved).
3. Consider a Testamentary Trust
A Testamentary Trust can be a powerful tool to protect your children's inheritance. For example, by establishing a bespoke Testamentary Trust in your Will, you can set aside assets specifically for your children while ensuring your spouse is financially supported during their lifetime. Further, this can allow you to have control over how and when your assets are distributed.
4. Review Beneficiary Nominations
As part of your estate planning process, it is important to review and update beneficiary designations on superannuation accounts, life insurance policies, and other financial assets. Failing to do so could result in unintended consequences, and assets might end up with unintended beneficiaries. It is important to seek financial planning and legal advice regarding these nominations - the direction (or misdirection) of a nomination can have a substantial impact in a blended family situation.
5. Plan for Unforeseen Events
Life is unpredictable, and it's essential to plan for unforeseen events such as incapacity or premature death. Whilst most people will have a Will in place - it is also recommended to have an Enduring Power of Attorney which appoints trusted individuals who can make decisions on your behalf if you were no longer able to. Appointing appropriate Attorneys is even more crucial in blended families, noting the complicated familial relationships that can be in play.
6. Involve Professional Advisors
Estate planning for blended families can be much more complex than a traditional nuclear family scenario, and accordingly seeking advice from professional advisors, such as estate planning lawyers and financial planners who regularly assist blended families, is invaluable.
7. Update Your Plan Regularly
As circumstances change, it's crucial to update your estate plan accordingly. Reviewing your Will and estate planning documents periodically and whenever significant life events occur (such as a marriage, birth, or divorce) assists in making sure any safeguards you have in place for your children's inheritance, remain in place.
Remember, estate planning is an act of love and responsibility towards your family. Taking the time to develop an estate plan that is tailored to your unique family situation can not only make the process easier for your loved ones, but can often be the determining factor between maintaining or hindering family relationships post-death.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
