Here’s the story of a lovely lady
Who was bringing up three very lovely girls.
All of them had hair of gold, like their mother,
The youngest one in curls….
Till the one day when the lady met this fellow….
We all know how it ends, with a happily blended Brady family but in the real world blended marriages have a few problems that need to be discussed and resolved. Just naming a few:
- Marriage invalidates a will
- Partners do not always contribute equally to the family asset pool;
- Parents often want to make uneven provision for the various children;
- People normally want their new partner to have a roof over their head for life (or at least while they remain single and independent!)
It is not well known that a marriage invalidates a will whereas divorce does not. This means that Carol may just have to deal with Mike Brady’s ex if Mike died without marrying Carol. Equally Carol’s will would be invalidated meaning Marcia, Jan and Cindy may not receive what Carol wanted them to.
Intestacy Has Rules
Dying without a new will after marriage is the same as dying without a will – this is known as intestacy.
With a properly prepared will the will maker has tremendous flexibility as to the way their estate is managed, not so when no will exists. Whilst the rules change from state to state in NSW as an example an intestate estate is allocated as follows:
- First the spouse, if there no children they can receive 100% of the estate;
- Spouses with children? The Spouse gets $350,000 + 50% of the remainder of the estate, children and grandchildren share in the remaining 50% ;
- If no spouse, kids or grandkids exist then a cascading list of beneficiaries exist:
- Parents, then
- Siblings, then
- Grandparents, then
- Aunts & Uncles, then
- 1st cousins, then
- The State of NSW
There are exceptions and nuances (such as step children) but the above serves as a rule of thumb since the law was updated in 2010. This is a concise guide in NSW, all other states and territories have similar guides:
I will expand on the solutions to the other three problems in the next posts but for now make sure you ask your clients about their own and their children’s situation – the WITYEP survey (What’s Important To You: Estate Planning) in the EPFL system can help you with this conversation. Nothing elevate your status more with clients than being trusted with the care of their most precious asset – their family.
Good advice puts people first!