“How do I make sure that, my assets are distribute in the way I intended when I die?"
Blended families are becoming more and more common in New Zealand. This means we are often asked “how do I make sure that, my assets are distribute in the way I intended when I die”? Take this scenario as an example:
Georgia has two children (Aimee and Sam) with her former husband. Georgia meets Andrew who has one child (Chelsea). Together Georgia and Andrew get married, and buy a house (“the Family Home”).
It is common that in a Will, Georgia would leave her entire estate to Andrew and vice versa. In the first instance this seems ok. However, what happens to Aimee and Sam if Andrew inherited Georgia’s entire estate?
Let’s assume after Georgia’s death, Andrew stops having contact with Aimee and Sam. Consequently, Andrew writes a Will leaving everything to Chelsea. Aimee and Sam will now never benefit from their mother’s estate.
Both Georgia and Andrew want to make sure their assets are passed down in a way they are comfortable with and in way that provides for their respective children. There are two options available to them:
1. Life Interest Wills
Firstly, Georgia and Andrew could make life interest Wills. Under a life interest Will Georgia would leave a life interest in her share of the Family Home to Andrew, to allow him to live there until his death (or on other conditions as she sees fit).
Andrew will then be able to use the Family Home, as he pleases. Upon Andrew’s death (or on any other conditions that may apply), Georgia’s share of the Family Home will be distributed in accordance Georgia wishes set out in her Will.
Georgia’s wishes are likely to be that Aimee and Sam are to receive Georgia’s half share of the Family Home equally. Andrew can then leave his share to Chelsea.
2. Mutual Wills
Alternatively, Georgia and Andrew could make mutual Wills. This would mean Georgia and Andrew dispose of their property in a way that they agree on together during their lifetime.
For example, Georgia and Andrew may agree to leave their entire estates to each other on the basis that when the last of them dies, the whole estate is distributed equally between Aimee, Sam and Chelsea. To do this, Georgia and Andrew will need to have a clause in their Wills that states that they agree not to vary or revoke their Wills without the consent of each other.
This means that when Georgia passes away, Andrew cannot change his Will to exclude Aimee and Sam and vice versa.
Blended families often throw up legal issues that aren’t immediately apparent. To discuss how this may arise in your circumstances, contact Shelley or Nicole in our Estate Planning Team.