14
September
2018

Estate Planning

Estate planning for blended families

In recent times we have a much higher prevalence of, for a lack of a better term, “non-traditional families”. This presents some different challenges when it comes to estate planning. With second marriages, long-term de facto relationships and blended families being commonplace, it is becoming increasingly likely that succession laws will not reflect your wishes and you need to make plans to ensure that your assets are distributed as per your requests.

These considerations may also be relevant if a beneficiary is in a “non-traditional (again, I hate that term) family” situation.

It goes without saying that it is essential to establish a Will to ensure that your assets are distributed as per your desires. It is also worth considering the use of Testamentary Trusts if a potential beneficiary is in a complicated situation. There is so much information in relation to Wills and the use of trusts, that I couldn’t possibly cover it all in a single article.  The take away message is this; if you don’t have a Will, get advice and get it sorted!

An important thing to remember when developing estate planning strategies is that not all assets form part of the estate. Things like superannuation and property owned as joint tenants are not part of the estate and are treated separately. This provides both a strategic opportunity and the potential for unintended results.

In the case of joint tenancy, upon death of an owner, the property automatically passes to the surviving owners. This might be exactly what you would like to occur, however, there are circumstances where this is not desirable.

A classic example where this is problematic is for second marriages with adult children from previous relationships. The desire for the couple is often that half of the house be passed to each of their respective families upon death. If not correctly planned, what is likely to happen is that when the first partner dies, the house passes onto the surviving partner and later to their own children. A way to avoid this is to have a “tenants in common” ownership structure, which essentially means that each partner owns a share of the house that will flow on as per each owner’s wishes. To avoid the surviving partner having to either, buy out the estate or sell and lose their place of residence, a “right to occupy” agreement is normally drafted to allow the surviving spouse to continue to live in the home.

Superannuation has different tax treatments for dependants and non-dependants for a death benefit payment. Within “non-traditional family” situations, it is quite common for the desired beneficiary not to be considered a beneficiary as per the Superannuation Act. This needs to be considered when constructing an estate plan.

Estate planning is important and should not be ignored when making financial decisions – seek advice.

Author; Alex McKenzie Categories: Future Financial Services Blog

About the Author

Alex McKenzie

Alex McKenzie

Owner at Future Financial Services

Past:

  • Paraplanner at Zammit Partners Investments
  • Unit Trust Administrator at Colonial First State

Education

  • University of Western Sydney
  • Penrith High

About

As a Financial Planner I help people to achieve what they would like in life. This involves helping you to identify the things in life they would like , developing plans to help achieve them and strategies to protect what you already have. We do this by providing Financial Advice to guide you through your life stages.

The financial planning process involves determining a clients current situation and financial objectives and tailoring strategies to assist in best achieving those objectives.

I am an expert in superannuation, investments and insurance, these are tools we use to help you achieve your goals.

I aim to use my knowledge of superannuation, taxation and Centrelink to efficiently use your assets and income to achieve your financial goals.

Retirement and pre-retirement planning, wealth creation, asset protection, insurance planning and estate planning are all areas of advice that I provide.

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