Later-Life Blended Families, Wills and Estates: How easily it can all go so wrong ...

Couples coming together later in life with their own adult children make for interesting times when it comes to Wills, but can be a literal living nightmare for those left behind if the implications arising from the contents of a Will aren’t thought through properly. Here’s one example of how badly things can go wrong …

Bob and Joan (fictitious names) came together in their mid 60’s, each with adult children from prior relationships. They’d been together for about 10 years before Joan died. During their relationship they pooled their money and bought a home and a holiday bach, all in ½ shares each. They approached a law firm to draft their Wills. After legal advice, Joan’s Will appointed her adult children executors, left a life interest in her ½ share of their family home to Bob (which would pass to her children when Bob died), and gave her adult children her ½ share in the bach outright. And Bob did the same in reverse with his adult children. Nice and straight forward you’re thinking? Umm, no, then there'd be no point to this article would there! The trouble is no one actually thought through how these arrangements would actually work in practice, and what potential disputes or issues may arise.

Joan died about a year later. The same law firm then acted for Joan’s adult children in her estate and had applied for probate. But relations and allegations started unravelling between Joan’s adult children and Bob over money and assets, and the law firm found itself in a conflict situation between their having previously acted for and advising Bob and Joan, and now acting for Joan's estate via her executor children.

So what are the issues arising from how Bob and Joan had structured their wills on advice from their lawyers? One of the issues is that the couple should perhaps have been advised to enter into a Contracting Out Agreement under the Property (Relationships) Act, rather than attempting to regulate what was to happen to their asset pool on death via Wills. The other issue is they each should have appointed the other executors instead of their respective adult children so the survivor of them at least had some control over things. In Joan's case, her children being appointed as executors conflicted with their interest in preserving their beneficial interest in their mother’s estate. But the worst part is that the Will drafting meant Bob is largely beholden to Joan’s children as executors in relation to his life interest in her half share of their relationship home. This means he's constrained if he wants to sell, trade up or down, move into an occupation right or move overseas or cash up etc – he'll need the adult children’s consent to do anything. Further, Joan had given away outright her half share of the bach she and Bob shared so her children got part of their inheritance straight away. At no time during Bob and Joan's relationship did Joan’s adult children ever use the bach, and now Bob had to share it with them for the rest of his life. And yes, they demanded keys to the property.

Bob was shocked when he understood what the implications of both their Wills meant. Neither he or Joan intended that the survivor of them would be beholden to the other’s adult children for life. Neither could afford to start again on their own and had wanted to ensure the other would have a secure retirement and be able to look after themselves financially, not be constrained in the use of their home and bach property by the other’s adult children.

So where to from here? Well it's ongoing. Relations have broken down and it’s unlikely the parties will agree on a settlement between them or have any form of relationship moving forward. And Bob does not want to be answerable to Joan’s adult children for the rest of this life either. It is likely consideration will need to be given to applying to the court to remove Joan’s adult children as executors and appointing an independent executor such as Public Trust or Perpetual Guardian given the potential length of Bob's life interest.

Sadly, money and deceased estates frequently change people, and estate disputes like this are common unfortunately. Estates are always difficult in later-life blended family situations, but it is essential to think through how your Will provisions will actually work in practice, as well as considering whether to take steps to enter into a formal contracting out agreement too.