Blended families – what are the issues that arise during Estates and how can they be bypassed?
Blended families (“Brady Bunch families”) create special problems and their own challenges in estate planning. Children of past marriages need to be considered and both sets of children need their interests protected, without it impacting on the needs of a current spouse or partner.
Problems that occur from blended family estates include forgetting how assets are held, which therefore automatically pass to a joint owner, potentially creating conflict between the children of the deceased and the beneficiary, failing to distinguish giving “use” of assets to a surviving spouse during their lifetime, as opposed to an outright gift of those assets and creating dissent between the adult children of the previous marriages and the younger children of the current marriage.
The changing demographic of families in this modem age means the problems surrounding blended families are now more acute than ever. One solution is the use of mutual wills.
Mutual wills are based on the will makers signing a contract regarding the contents of a will.These wills are revocable and can be changed. The main feature of mutual wills is that there is an express or implied contract not to revoke a will after the death or incapacity of one ofthe contracting parties. Typically, a Mutual Wills Contract will include covenants as to the agreed terms of the wills of each party which are not to be changed.
Advantages of Mutual Wills
One advantage is that a mutual will gives the survivor of the contracting parties more freedom and flexibility to deal with assets during their lifetime while still reflecting the joint wishes of the will makers at the time they make their wills. This is contrasted with limitations imposed by way of alternatives such as life estates.
Secondly, the contracting parties can both have a say in how jointly held assets which will ultimately be dealt with by the survivor.
Disadvantages of Mutual Wills
The survivor may take action to circumvent the Mutual Wills Contract by, for example, disposing of assets. Usually, clauses are included in mutual wills to restrict this but they may be difficult to enforce
Secondly, the prospective beneficiaries will need to know about the existence of the Mutual Wills Contract as they will be the ones who may need to take action to enforce the trusts created by the Mutual Wills Contract.
Thirdly, the executor’s role can become more burdensome. It should also be noted that mutual wills are no different from other wills in that they may be subject to Court review under the family provision sections of the Succession Act.
The constructive trusts created by mutual wills can give rise to problems, but the fact is that some couples want to create binding contracts in relation to their wills. As mutual wills often deal with significant property interests, it is best to consult a specialist wills and estates lawyer prior to implementing or drafting a Mutual Wills Contract.
More Information
If you wish to obtain further information, advice or assistance in updating your will, or will disputes, please contact one of our will lawyers in our Estate Planning team at Matthews Folbigg on 9635 7966, email us at estates@matthewsfolbigg.com.au or through the website www.matthewsfolbigg.com.au
DISCLAIMER: This article is provided to readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as a definitive or complete statement of the relevant law. Liability limited by a scheme approved under Professional Standards Legislation.
