How to Protect your Estate from Family Provision Claims
- A wife or husband of the deceased;
- A de facto partner of the deceased;
- A former wife or husband of the deceased;
- A child of the deceased (including adopted and step-children);
- A dependant (wholly or partly) of the deceased;
- A grandchild of the deceased;
- A person who was a member of the deceased’s household at any time; and
- A person with whom the deceased was living in a close personal relationship as at the date of death.
Estate planning risks for blended families
How can family provision disputes be avoided?
Structure your will to protect your children.
- Mutual wills: Spouses can enter an agreement which prevents them from changing their wills after one of them dies. These arrangements are inflexible to changes in circumstances, but can also be difficult to enforce.
- Testamentary trusts: A testamentary trust only comes into being on the death of the testator. Creating a trust over the asset pool can allow for the provision of the other spouse with income for the rest of their life, while ensuring that the assets will be distributed to the children of the deceased spouse.
- Transfer assets to family members before death: Transferring assets to family members will remove these assets from your estate. However, you should be mindful of stamp duty, Centrelink and capital gains tax implications.
Ensure that you are adequately providing for your spouse and former spouse
It is important that you structure your estate to protect your children, and in a manner which adequately provides for your current spouse. If your former spouse has already received a property settlement, it is unlikely that they will be able to make a successful family provision claim.
Minimise surprises and risks
The testator should discuss the expected division of their estate with family members to avoid later surprises. It is important to note that someone cannot completely ‘contract out’ of making a family provision claim in the future. Even if such an agreement is made for valuable consideration, the court can still order further provision. When deciding on provisions for adult children, the testator should consider factors such as their health or disability, ability to earn an income, and the possible need to provide financial security for the future.
Choose the right executor