Are you part of the 30% of Australians who have remarried and now have adult children from a past relationship?
It's a common fact of modern life, people live longer and have more relationships. It's not uncommon for many parents today to be part of a blended family and to each have older (and often soon-to-be adult) children from a former relationship.
And when it comes to making a Will, how can you be sure you're kids are not cut out of their inheritance by your new partner?
Here's a strategy that might be worth learning more about.
Read in this article:
If you're like 30% of Australians who find themselves remarried after having kids, here's a legal strategy to help you sleep better at night and safeguard your children from past relationships while still protecting your new partner.
- One-third of Australian marriages are second marriages, and many of these marriages include partners with children from a previous relationship.
- One of the uncertainties facing many couples who have married again after having children, is the practical way to best provide for their current partner and at the same time ensure their own children from a past relationship are financially taken care of in their Will, and don't run the risk of being disinherited?
The cause of many sleepless nights
Finding a way to ensure assets can be left for your children from a former relationship is one of the biggest frustrations for newly married-again couples and the cause of many a sleepless night or disagreement.
Thankfully, there is a strategy that can help fix this problem.
Why is this an important issue?
The older you are when you remarry, the more likely you’re bringing larger financial assets into the marriage, like residential property, superannuation funds, life insurance and investments. There may even be family heirlooms or key assets you might want to make sure end up with your biological children when you pass away.
- But what happens if your new partner inherits your estate, then later remarries or disinherits your biological children?
This is where clever estate planning can help preempt and reduce family conflicts.
A Contractual Will Agreement can bring greater certainty for couples who have remarried with older children and who just want to ‘put it all in writing’ so they don't have to leave a family conflict later.
What is a Contractual Will Agreement?
Simply said, a Contractual Will Agreement is not a Will.
- It’s a contract between two living people not to change their Wills.
Example of a Contractual Will Agreement at work
Mike & Mindy are a couple who have children from previous marriages and remarried later in life. They create personal Wills leaving everything to each other and agree that when the last person passes away what's left is split between all the children equally.
- A Contractual Will Agreement contractually protects this.
How does this work?
This Agreement is a document between two people. This is often a husband and wife (but is equally valid for same-sex couples too) who each have children from prior relationships. They make Wills and want to ensure that their partner who survives them keeps their part of the bargain.
The Contractual Will Agreement stops them from cutting out the other’s children and stops both of them from changing their Will.
How restricted is the surviving partner?
The surviving partner is allowed to use the estate assets left to them but can’t give them away or waste them or deliberately act with the intention of defeating the agreement.
For those who like the legal background
The courts honour these Agreements:
“a contract between persons to make corresponding wills gives rise to equitable obligations when one acts on the faith of such an agreement and dies leaving his will unrevoked so that the other takes property under its dispositions. It operates to impose upon the survivor an obligation regarded as specifically enforceable. It is true that he cannot be compelled to make and leave unrevoked a testamentary document and if he dies leaving a last will containing provisions inconsistent with his agreement it is nevertheless valid as a testamentary act. But the doctrines of equity attach the obligation to the property. The effect is, I think, that the survivor becomes a constructive trustee and the terms of the trust are those of the will which he undertook would be his last will.” Birmingham v Renfrew [1937] HCA 52
The next steps
So, if you're looking to tie the knot again or you're already on your next serious relationship, here are the next steps for you to get your Wills finally sorted.
- Update (or make) your Will, then
- Give some careful consideration about whether you also need the additional reassurance of a Contractual Will Agreement.
(We’d love to help you out with both of these legal documents and help you get greater certainty looking after your new partner and your own children from a past relationship).
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
