Speaking to The Age, Suzanne Jones, Partner and Head of Estate Planning at Coote Family Lawyers, offers practical advice on how Australians can prevent their inheritance from becoming contentious. 

When it comes to planning your inheritance, even the simplest of estates can have plenty of complexity. So when you add in multiple children, marriages, and current and former partners, the process can quickly become nightmarish. 

Here are four steps, suggested by Suzanne Jones, partner and head of Estate Planning at Coote Family Lawyers and other experts, that can reduce the likelihood of inheritance squabbles in blended families.

 

1.    Consider a binding financial agreement or 'prenup'

If you are about to re-marry but don't feel ready to discuss wills and inheritances with your new partner, a binding financial agreement or prenup can help establish your wishes for your assets. 

Although binding financial agreements typically set out how a couple's assets are to be divided if they separate, they can also include a clause that makes them applicable if a party dies, Jones says. 

"Technically, a binding financial agreement can only deal with separations, but courts do look at them in other instances, such as death, to help establish the intentions of the parties."

 

2.    Draw up a mutual will agreement   

A mutual will agreement is a binding contract between a couple that commits the parties to honouring the wills they have drawn up in each other’s presence. These agreements can also specify what should happen to each party’s assets after both parties have died.

They are particularly useful in the case of blended families because they allow each party to provide for their spouse in the first instance while ensuring their children are taken care of later, says Jones.

“For example, an agreement might state that all your assets go to your spouse to start with, then, on their death, those assets transfer to your children from a previous relationship.”

For such an agreement to be meaningful, the parties also need to agree not to distribute or diminish any assets they inherit from their spouse, Jones notes.

“It is a very helpful document because it sets out exactly what the couple agreed to in a variety of scenarios, instead of everyone guessing,” she says. “It also gives the children a legal basis to make a claim if their parent’s spouse breaches the agreement in any way.”

 

3.    Opt for an early inheritance

The simplest way to minimise the risk of family members fighting over your estate is to distribute some of it while you are still alive, Hayder Shkara, principal of Justice Family Lawyers says. “Gifting assets now makes your estate smaller and, therefore, less enticing for people to argue over when you’re gone.”

In situations where you are estranged from an interested party – for example, a former partner – the early distribution of assets can also neutralise the prospect of them making a claim on your estate, Shkara says.

“You cannot prevent an eligible party, such as a former spouse, from making a Family Provision Claim after you pass away, but if there’s nothing of value in the estate, a claim becomes essentially pointless.”

 

4.    Speak to your family 

“We live in a society where many people don’t talk to their children about what is in their will, and I think that is problematic,” says Prue Vines, professor of law at the University of New South Wales.

A conversation with your entire family can help the group come to terms both with your mortality and with how your estate will be divided, Vines says. Dialogue can be particularly useful in the case of blended families, where assets might be divided unequally.

“Psychologically, it can be beneficial to say: ‘Look, this is what I’m planning. How do you feel about it?’ And give your family time to digest it and respond,” Vines says.

At the end of such conversations, one option is to ask your family members to agree in writing not to challenge your will. However, courts will generally not enforce such agreements, meaning parties can still proceed with Family Provision Claims, Vines says.

“The real benefit of talking and agreeing is that people aren’t surprised by your will when you die,” she says. “If they are prepared for what’s going to happen, they are less likely to fight.”

 

Read the full article here.

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