The blended family is commonplace nowadays however the financial aspects of a blended family are complex and rarely spoken about and therefore dealt with effectively. Starting over financially as well as preparing for assets to pass to chosen beneficiaries upon death are uncomfortable conversation topics.
Here are a few considerations to start the (awkward) conversation:
Division of Assets at Death – no beating around the bush let’s start with the big one! This one might see you sleeping on the couch but that may be a better alternative than seeing those you love not provided for. Everyone has a unique situation that cannot be covered in this article and will vary greatly if you have children from a previous relationship or if you have additional children from your current relationship, however discussing who you would like to provide for and how that will happen is an important step. Your spouse may have their own wealth they have bought to the marriage or you may want to provide something specific for them. A plan that leaves assets to your spouse with the understanding that they will leave any remaining assets to your biological children can be a recipe for disaster. The surviving spouse may change the plan at any time and often relationships change once you are no longer in the picture. Providing a life tenancy with the intention that your children will eventually end up with the assets upon the death of your spouse can also cause tension. Many families would rather receive less but be able to access wealth earlier to provide them with flexibility and options and not strain the relationship. The complexity and emotion can put these issues in the “too hard basket”.
Choosing Executors - your Will may detail your intentions, but who will ensure those documents are administered properly and fairly? Choosing an executor all members of a blended family feel comfortable with can sometimes be a challenge. This may be best addressed by choosing a third party or a professional however be aware of fees that may apply and ensure your instructions are clear and understood.
Superannuation – did you know that super is not an estate asset? You can make a nomination on who receives your super death benefit however they need to be a dependant under the SIS Act (superannuation legislation). Adult children may have tax on benefits they receive although some careful planning can limit/remove this.
Retirement Planning – building wealth together can also have its hiccups. One party may come into the relationship with more or an age gap may see you with different time horizons. Start having an open conversation about your common goals and this should lead into how those goals may then be achieved.
There are a number of financial strategies that can benefit blended family’s retirement and estate planning goals. We strongly encourage you to meet with an estate planning specialist and we are also available to join your meetings to facilitate creating options that provide for all your loved ones. We work with local specialists and would be happy to put you in touch with them.
This information contained in this document has been provided as general advice only. The contents of this document have been prepared without taking account of your personal objectives, financial situation or needs. You should, before making any decision regarding any information, strategies or products mentioned in this document, consult with your GPS Wealth Ltd financial adviser to consider whether it is appropriate having regard to your own objectives, financial situation and needs