With the landscape of the family changing rapidly, it is important that estate planning becomes more thorough and careful, ensuring that the needs of every family member be taken into consideration and provided for.
The most immediate change that needs to be addressed is hoe to plan for the passing od an estate that encompasses a blended family. Under these circumstances there are often long-standing careers, savings, superannuation policies and assets that were derived before the second marriage came into being.
In addition, there are often two sets of biological offspring that need to be financially taken care of who do not share parentage.
STEP 1: Open up a line of honest communication
The first step is to open up a line of honest communication between yourself and your spouse as to how you would like your assets to be divided upon your passing.
It is important to make some preliminary determinations
- You may want to create two separate wills wherein each of you provides a specific bequest to the other and directs separate bequests to your own biological children.
- Your estate can be placed into a Trust with monies distributed to your spouse and your biological children, separately. You can include your step children in this type of Trust also. Upon your spouses passing, the balance of the spousal Trust can be bequeathed to your biological children and/or your step children.
STEP 2: Consider and answer.
In any of these possible estate planning avenues, there will be several other questions to consider and answer.
- It is important that both spouses review and alter the terms of their old will or revoke their old will in whole or in part.
- Each spouse must consider if they want to provide for their prior spouse and if so, in what capacity
- If either spouse has living parents, they may wish to leave a distribution to their elderly parents. It is recommended that in this situation a second beneficiary also be named in the event that at the time of the spouse’s death, the parents of the spouse are no longer living.
- Any policy that creates a financial distribution outside of the will, including life insurance or retirements funds, should be revised and new or additional beneficiaries should be named. If there is more than one beneficiary named, it is important to include the percentages of the distribution to each party.
- Any designations or power of attorney or guardianship over an incapacitated spouse should also be reviewed and confirmed or predesignated as the circumstances dictate appropriate.
STEP 3: Set up an arrangement for the distribution of your superannuation funds
Finally, it is possible to set up very particular arrangements for the distribution of your superannuation funds.
The Australian Prudential Regulation Authority provides a fund known as a self-managed super fund.
This fund appoints a trustee that distributes your superannuation fund monies to your surviving spouse as a pension throughout the remainder of their life, and upon their death, the balance is distributed to the beneficiaries of your choosing.
This is another viable option for the careful distribution of monies that pass by designated beneficiary.
What are the two most important components for successful estate planning?
- Open and honest communication
- The use of a licensed professional in the area of estate planning to assist you in making the most financially beneficial decisions to all those involved.
If you enlist both of these assets to your advantage, all of your questions and concerns can be alleviated and you can successfully plan for the future of your spouse and your family and loved ones.