Blended families are everywhere. By “ Blended Family” I really mean any situation where two families are “blended” into one. Typically it might be two people in a relationship where they each have children from their previous “rodeo”. Or it could be one of them has children and the other doesn’t.
From the parent’s perspective, he or she usually wants to cater for the children first and foremost. But now they also have a relationship with their new partner and feel obligated to him or her, particularly if the relationship has been a “thing” for some time.
How do you cater for everyone without it becoming a warzone? You have to think carefully about what to do, and perhaps the best starting point is to consider the laws that apply.
So what are these laws? Well, the main ones are:
Family Protection Act:
If you do not make “adequate provision” in your Will for the “proper maintenance and support” of various categories of family members the court can order that the estate be distributed differently.
A de facto partner can make a claim that can be at the expense of the children, and vice versa. Plus we already know that children can make a claim at the expense not just of the mother or father’s de facto partner, but also at the expense of his or her siblings.
The Law Reform (Testamentary Promises) Act:
This Act allows someone (not necessarily just a child or partner) who provided work or services to the deceased person to claim against the estate. They would have to show that the deceased promised to reward them for those services.
If the claimant can prove an express or implied promise by the deceased to reward them when the deceased dies, they are on strong ground, and even more so obviously if there is a clause in the Will to support the claim.
What happens though is that sometimes the deceased forgets to include any provision in the Will. Hence the Act, allows the claimant to claim against the estate.
Property (Relationships) Act:
If you are in a marriage or de facto relationship, the basic starting point is that once you have been together for three years then the law presumes that you share all property of the relationship equally. So three years into the relationship if you split up the law says 50:50. That is often not what you would want and almost certainly won’t be what the children want.
You can veer away from equal sharing if you and your partner decide, and if you want to you really need to get a “contracting out agreement” in place before you hit the three year mark.
Constructive Trusts:
Normally property owned by a Trust it is not technically “relationship property” under the Property (Relationships) Act. But where a de facto partner has contributed to the increase in value of a property owned by the other party or by a Trust of which the other party is beneficiary, the de facto partner may be able to claim a “constructive trust” over that property. For example, if the de facto partner has contributed to it significantly over the years and has a reasonable expectation of some interest in the property because of that, it would be unreasonable of the other party to deny that.
So you can see that there is enormous potential for claims from different angles no matter what the Will might say.
It also means that if you are in a blended situation and you want your kids and your partner to get on swimmingly once you’ve gone, you should be very careful about what your Will says.
There are a lot of factors to consider. For example:
The degree of estrangement – if a child has not participated in the deceased’s life in any significant way their claim is likely to be marked down
The degree to which one child may have contributed more than others to the increase in value of the deceased’s estate, or been more involved in the deceased’s life
The size of the estate – a large estate makes it easier to accommodate competing claimants
Whether one child is in need of more support than others, whether that need be financial or other support (for example, medical)
The length of the relationship with your new partner
Whether the de facto partner has contributed to the increase in value of the deceased’s estate, in which case he or she can claim to have a “constructive trust” over such property.
Even if you have a Will, should you also have a Trust? Or a Contracting Out Agreement?
Once you have gone you have no control over whether someone decides to make a claim or not. So a level of communication along the way is likely to be helpful in defusing any potential issues.
There are other things to be aware of:
If you and your de facto partner own property jointly then it will pass to the survivor if one of you dies. So it doesn’t even pass into your estate and as a result, a Family Protection Act claim is not going to help the children. The effect of this for children is that the estate is often much smaller as a result, especially if most of your wealth was tied up in the house. The children can make a claim under the Property (Relationships) Act to have the deceased parent’s half share of the property brought into the estate.
If assets are owned by a Trust, often the children are beneficiaries of that Trust. But the trustees often have flexibility because trust assets do not form part of the deceased’s estate and the trustees can distribute unequally (or to a de facto partner) without the worry of a Family Protection Act claim. However the trustees need to be aware that a claim can still be made by the children if a “fiduciary” relationship exists between their deceased parent and the children. The same factors above will have a bearing on whether it did or not.
Did the Will maker have capacity at the time he/she signed the Will?
Did the Will maker set out any reasons why he or she made unequal provision for children, or provided more for the de facto spouse and less for the children?
Was the Will maker “under duress” from any family member or de facto partner when he or she made the Will?
So while everyone wants the situation to be harmonious between the deceased’s children and his new partner there is some natural tension there, and how it plays out is never the same from one situation to the next. Greyness is everywhere.
Many of you will relate to what I have laid out above. To get some more clarity, please contact Russell (russell@queenstownlaw.co.nz) or Claire (claire@queenstownlaw.co.nz) to discuss your particular situation.
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