Modern Family Succession and Estate Planning
Managing intricate family dynamics and blended families can present challenges, especially in the event of a family member’s passing. Estate planning plays a crucial role in ensuring that your wishes are carried out effectively. Within a comprehensive estate plan, the will is crucial. It determines asset distribution and helps in managing affairs during incapacitation. This is ensured through an enduring power of attorney and a medical power of attorney, which specify decision-makers and instructions.
Professional guidance is vital in estate planning. It ensures all factors, including taxes, are considered and protects your loved ones’ interests. Clear communication of your intentions is especially crucial in complex situations to ensure your wishes are understood clearly.
Here are some key aspects to contemplate:
Superannuation:
Prioritise establishing a binding death benefit nomination to dictate the distribution of your superannuation funds. This prevents the trustee of your super fund from making independent decisions. Remember that this nomination usually remains valid for three years before needing renewal.
Blended Families:
If you have been married multiple times and/or have children from different partners, your will can be a powerful tool to ensure the well-being of your chosen beneficiaries. You might want to safeguard your children’s inheritance over your spouse’s or ex-spouse’s. Alternatively, your will can protect your current spouse from claims made by former spouses.
Homeownership structure plays a pivotal role in this context. If you bought as ‘joint tenants,’ the surviving spouse gets the entire property. ‘Tenants in common’ lets each spouse share their part. Think about adding a ‘life interest’ clause to your will. It lets your current spouse stay in the home until they pass away before passing ownership to others.
Trusts:
Review any existing family trusts with a blended family in mind. Ensure that the trust deed provides explicit instructions for succession to cater to children from previous relationships.
Your will can also establish testamentary trusts to provide for dependents with disabilities, protect assets from potential misuse by a child, or shield an adult child’s interests in the event of divorce or bankruptcy. In these cases, an inheritance from you becomes part of their property, subject to divorce settlements or creditor claims.
Business Transition:
If you have a business partner or want to pass on a family business to a specific child, think about using life insurance. Designate your partner(s) as beneficiaries so they can ‘buy out’ your share. For a family business meant for one child, the insurance payout matches its value, ensuring fair distribution to others.
Keep checking the business’s value and the insurance policy to stay aligned with your plans.
Estate planning can be a complex and emotionally charged process, especially when intricate family dynamics are involved. Don’t hesitate to reach out to us for expert assistance in crafting an estate plan that aligns with your desires and addresses all relevant considerations.
