2nd Feb 2017
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Should Paul’s second wife be the beneficiary?
Author: Rod Cunich
Mature couple looking over wills

Paul has married for a second time and doesn't want to change his will. His second wife thinks he should. Legal expert Rod Cunich offers his take on the situation.

Q. Paul
My wife and I are both in our second marriage; I have two adult children, she has none. We haven't yet updated our wills and I would simply like mine to remain as it is – my children will currently get everything I have. She doesn't agree and thinks that she should be the beneficiary. What can we do to break the impasse?

A. When it comes to estate planning, blended families can create a planning nightmare.  Not agreeing what should happen is just the starting point. Even when you do agree, putting into place arrangements to achieve your wishes can be even more daunting.

So let’s start with the easy part of your question. Should you include her as a beneficiary.   The short answer is: Yes.

Why?

First, under the Family Law Act 1975, with the passing of time, assets held by each of you will become matrimonial property, with each party having an interest in the other’s property. If you separated then a court would determine who is entitled to what. The factors are many and varied but include the length of the marriage, what each party brought to the marriage and what each party contributed during the course of the marriage (whether financial or non-financial contributions). I’m not a family law lawyer but from the outside my best assessment of the process is that it involves both art and science to determine respective entitlements.  Rest assured however: there are entitlements. It’s only the extent of the entitlement that is uncertain.  

Second, if you die without making provision for your second wife in your will she could challenge your will claiming that you made inadequate provision for her. Each State and Territory has legislation that gives a spouse the right to make such a challenge. Again, the courts will make a determination. In NSW, for example, there are at least 16 criteria that a court will examine when determining if a spouse should receive a benefit from the estate and if so, how much. In reality, it is really a question of ‘how much’, not ‘if’.

So what do you do?

Accept the fact and deal with it. How? This is where it gets interesting, as there is no definitive answer or solution.

The starting point is to discuss the issue openly and honestly in an attempt to get some understanding about what might be appropriate. This often requires some input from a family law expert who understands how family law might view the situation now and over time. If you can work out what a family law court might decide your respective entitlements are, and you make provision for this, then there is much less chance that any challenge to your will, will result in surprises.

There are many strategies available to protect assets for your children, yet still provide for your spouse. They include:

  • enter an agreement (often called a pre-nup) with your partner (de facto, married, same sex – it’s all the same) under the Family Law Act, expressly agreeing who is entitled to what
  • leave your home to your children, but in your will grant your partner the right to live in the home for their life
  • use superannuation and/or insurance to ensure that you have enough to provide for your children and your partner on your death
  • hold assets jointly with children so they automatically own the asset when you die – it won’t go through your estate.

There are many more options available but none are ‘fool proof’, so incorporating as many as possible is the best strategy. 

Cooperation, agreement and formal documentation are all key to success. If you can’t get past the first base, then you could potentially have greater problems in your relationship than your will.

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    COMMENTS

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    Janran
    7th Feb 2017
    10:42am
    If Paul is running the house, cleaning the house, mowing the lawns, upkeeping the garden, washing the clothes, shopping for the house and preparing the meals, then I can understand him wanting to exclude his second wife from inheriting any of the house.
    But not many wives get to live in a house as if it's a motel where she's on permanent holidays. AND, she has no children or grand-children duties - she's laughing!
    Hobbit
    7th Feb 2017
    11:15am
    Really has nothing to do with housework. It's his wife, she should get everything. Does he love her or not?
    Janran
    7th Feb 2017
    11:54am
    In olden times, wifely duties were clearly set out and she would automatically inherit if the husband died. But it's not only housework we're talking about. It's about expectations of the degree of commitment, which can never be measured in money terms.
    Does he expect her to care for him if he's sick, demented or dying? Does she expect the same of him? Will she shove him into a nursing home at the first opportunity, knowing she'll have the house to herself?
    I know many people, including my mother, who shortened their own lifespan by caring for an ailing spouse, years after they should have been placed in care. They do it because they love them forever. But does Paul?
    Paul needs to be up front about what he expects from the marriage. Get a pre-nup agreement, so it's clear what each partner brings to the relationship, both financially and socially. Make a provision for both partners' end of life care, should the other die.
    Trishat
    7th Feb 2017
    12:56pm
    Many Australians are unaware that their will becomes invalid when they marry.
    A. N. Onymous
    7th Feb 2017
    1:09pm
    You and I are aware, Trishat. I don't think we are the only two who are. Many are unaware; many others ARE aware. I find it odd, to say the least, that the "legal expert" who wrote this article did not include this fact. Is he among the "unaware" Australians?
    feefifofum
    7th Feb 2017
    2:28pm
    I wondered the same thing; although, we were advised that if we wrote a will and made mention of our forthcoming divorce (or marriage), the will would be considered valid after said divorce / marriage.

    Would be better for all though, if a new will was made with frank, open, honest discussion between both partners - if they can't discuss this sort of thing now, I wonder how long their relationship would last anyway ...
    Rosret
    7th Feb 2017
    1:01pm
    It is a tough one with these new blended families. - and it does make a difference to the choices one makes if left in that situation. It is so easy to just go with the flow when "in love".
    However what you came into the relationship with is yours. It is only what has been accumulated since marrying or cohabiting that is automatically inherited. (I think)
    I think the legal system needs to reevaluate the new family scenario.
    I am tired of seeing the first family's estate (and welfare) frittered away for the blonde bimbo.
    KSS
    7th Feb 2017
    1:38pm
    On the other hand the first wife should not automatically get anything other than what was in the divorce agreement. No going back for a second bite at the cherry on the Ex's death which may be many many years after the seperation.

    In all likelihood any children are now adults and no longer financially reliant on the Father. Bequeath to them if you wish but the current spouse (at the time of death) should not be ignored.
    World Prophet
    7th Feb 2017
    2:01pm
    This is a very complex issue. Paul may wish leave the estate he and his first wife built up to their children, and may feel that his second wife should not benefit from what has been built up before she came on the scene. Not an unreasonable view. On the other hand this has to cut both ways, and what's sauce for the goose should be sauce for the gander, and she may wish to leave her estate to family of her choosing and not necessarily to his children. This should have been discussed when their relationship started to become serious, so that any potential future conflict could be avoided. Then, according to the consensus reached, steps should have been taken to safeguard the position of both parties. Typical mess when people try to avoid touchy subjects - never works.
    feefifofum
    7th Feb 2017
    2:25pm
    My de-facto partner and I have been together for 10-years - both divorced from our first spouse(s) and both have children from our first marriage(s) - but no children together.

    We've updated our wills to state that the surviving partner inherits everything, as we believe that we have a responsibility to support the other partner upon the first one's death. However, the children of whomever of us dies first, will inherit a specified amount, then, upon the death of the remaining spouse, the full estate will be split among all the children (less the amount that any may have already received).

    Our kids know of the arrangement because we didn't want them to think that their parent's new partner was going to take off with their inheritance (as has happened to friend's of ours). Also, the longer we are together, the more joint assets we will have accumulated, so in reality, half of the estate would have been brought by the new partner anyway.
    Attila
    7th Feb 2017
    3:25pm
    If divorced the first wife should have been through a settlement already. As someone says no second bite of the cherry! In the second marriage each party are equal partners especially if they have been married for several years. Each needs to make an inventory of what they brought into the marriage, that should be documented for the adult children. The creation of the new marriage should have assets listed if it is becoming an issue. I would have said the assets gathered in the second marriage should be equal. Even if both parties have or have not worked....one party probably was the bread winner, be it male or female. One would have kept the home, be it male or female. I brought more assets into my second marriage while my spouse went out to work. It is an individual thing, but it sounds if this couple need to document assets.
    niemakawa
    7th Feb 2017
    6:41pm
    I would suggest that any property bought as a couple then the title deeds be noted as TENANTS IN COMMON. Upon death of one partner the property does not automatically go to the surviving one.
    Janran
    5th Jun 2017
    12:25pm
    So, presuming Paul's first wife received half of the estate from that failed marriage, why does Paul presume that SHE isn't going to provide at least part of an inheritance for their grown up children? After all, they are her children, too.
    Why does Paul seem to think that only half of their children's parents will provide them with an inheritance?
    Golden Oldie
    7th Feb 2017
    5:18pm
    My understanding of the law is that any prior wills made before a marriage become null and void, except in those cases where a will is made in anticipation of a forthcoming marriage. This person has already married for the second time, so his will leaving everything to his former wife is no longer valid. He needs a new will to organise what he now wants to happen on his demise.
    Alexii
    5th Jun 2017
    12:11pm
    That's right, Golden Oldie.
    niemakawa
    7th Feb 2017
    6:37pm
    Children from a previous marriage should get preference, the Family Court should establish this first and foremost, whether a will exist or not. A will is automatically revoked if divorced or a person re-marries, so unless a new will is written then upon death that person dies intestate. A will in itself does not guarantee that a beneficiary will receive a bequest, all wills can be contested, even from ex-wives, partners, you name it.
    Gammer
    7th Feb 2017
    7:02pm
    My husband's two children challenged his will and I had also not been adequately provided for when he passed away 12 years ago... the upshot was that half of his estate went into the pockets of the five solicitors and barristers who represented the various parties who believed he should have provided for them. Eight years of infighting and legal wrangling... doesn't matter what's in your will - it can and most likely will be be challenged!
    Janran
    7th Feb 2017
    8:12pm
    That's such an awful story, Gammer.
    Unfortunately, our legal system is deliberately adversarial, so people with money can "see out" others with less money. Meanwhile, the greedy solicitors and barristers rake it in, and the truly grieving are left with little.
    OlderandWiser
    8th Feb 2017
    6:14pm
    Yes, blended families plus greed = windfall for lawyers. In a case I'm involved in (as executor) the older child lost her inheritance from her deceased father when the mother remarried and the second husband refused to support the family, resulting in the older child suffering denial of educational opportunity and 25 years of hardship. The entire inheritance from her father was spent protecting the younger child from harm caused by her father failing his obligations.

    The younger child recently inherited her father's (the second husband's) considerable estate, so the mother, in consideration of the older child's earlier loss and sacrifice AND the fact that everything the mother had originated from the older child's father's estate, left most of her much smaller estate to the older child.

    The younger child has contested the will demanding more than half the mother's estate. Whatever the outcome, the older child will lose at least $50,000 of her inheritance, and potentially $140,000 or more, to lawyers - and possibly a huge chunk to a sibling who already inherited substantially, and who morally has no further entitlement (especially having robbed, defrauded and abused her mother while the older child invested heavily in provision for her mother's comfort)
    Nan Norma
    8th Feb 2017
    10:47pm
    Solicitors are sooooo greedy. As I found out from personal experience.
    OlderandWiser
    9th Feb 2017
    2:59pm
    Some disgusting relatives are much worse, Nan. Solicitors couldn't charge if the greedy frauds didn't mount wrongful claims. I'd be willing to bet very few claims are genuine.

    7th Feb 2017
    7:23pm
    Can't trust this article. The writer does not even know that wills are revoked by marriage!
    Bah!
    Nan Norma
    8th Feb 2017
    10:40pm
    First thing is: the wills are no longer valid anyway.
    Alexii
    5th Jun 2017
    12:09pm
    There is an important point not mentioned and that is anyone who was ever a dependent on the deceased is entitled to some part of the estate, so such people (even step-children from a previous marriage can lay claim to some of the assets of an estate.
    Alan
    17th Apr 2018
    1:06pm
    Paul needs to consider not only the needs of his wife but also the needs of his children. It is possible that he will predecease his wife and then his wife remarry. If everything passes to his wife then she is not under a legeal obligation to consider his children when she makes her will. Better that he makes provision for his wife, for example, live in the family home till either death or remarriage occurs and then have it automatically pass to the children. If the estate is large enough then give her the income from investments etc but the capital remains vested for the children.


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