Relationships complicate will-making
Drafting your will can be a balancing act when it comes to children and stepchildren.
Relationships can be complicated. An area where this is particularly complex is in the drafting of wills. Second and subsequent relationships, the presence of both biological and stepchildren together with increasingly complex ownership structures, can mean making or reviewing your will can be a daunting task. But don't put it in the too hard basket.
If you're in a second or subsequent relationship, particularly where there are children from previous relationships, wills need to be drafted with special care to avoid challenges by those who believe they have an unrecognised interest or entitlement.
In New Zealand, we have three pieces of legislation under which gifts made by a will can be challenged. These are the Law Reform (Testamentary Promises) Act 1949, the Family Protection Act 1955 and the Property (Relationships) Act 1976.
Your first duty is to your spouse or partner. The courts and the legislation (Family Protection Act) acknowledge that parents have a moral duty to provide for both their biological and their stepchildren. If the claimant is a child, the courts have focused on that child's financial and educational requirements within their particular family's circumstances and expectations. Recent case law has shown that the courts are usually granting between 10 per cent to 20 per cent of the will-maker's estate to adult children. A stepchild may make a claim against their step-parent's estate if he or she is being maintained wholly or partly by that step-parent before that step-parent's death.
While the courts have recognised you have a moral duty to provide for your biological and stepchildren in a will, you should note that any of your biological and stepchildren can only claim a share of your estate. This is where it gets more complex. Your estate doesn't include one half of your relationship property because the Property (Relationships) Act says that your surviving spouse or partner is entitled to a half share. Relationship property includes your family home, car, household furniture and appliances (even if you owned this property before your relationship began), and all property acquired by either you or your spouse or partner.
What happens to your family home when you die is often contentious in families. If your family home is registered in the joint names of you and your partner (as opposed to being registered in your names as to a half share each) when you die your family home will automatically be transferred to your surviving partner by way of what's called "survivorship". Survivorship is a legal process and it works outside of the terms of your will. Consequently, once your half share of your relationship property and your family home (if you own it jointly with your partner) are excluded from the equation, there may be little left in the pot for a biological or stepchild to make a claim against your estate.
When deciding how you'd like your will to be drafted or when you're reviewing your current will, it's important that you talk with your lawyer who will:
Work with you to identify your assets
Examine how those assets are owned and how they will be treated when you die
Discuss your personal circumstances and work with you to identify those people who may reasonably expect to have some provision made for them under your will, and
Provide some guidance and recommendations around the balancing act between providing for your partner/spouse and providing for your children/stepchildren.
Rachael Robertson is a partner in Christchurch law firm Corcoran French. Information given in this column is not a substitute for legal advice.
Sunday Star Times