No Will and Stepchildren

Blended families present unique traps and pitfalls when it comes to estate planning. A recent matter highlights the importance of estate planning particularly when there are new partners and stepchildren involved. A man died leaving only a Will from his prior marriage. Since making that Will his wife had died and he had re-married, bringing his child to form a family with his new wife and her son. By law, the act of remarriage automatically cancelled his old Will. The man enjoyed a very close relationship with his stepson, to the point that he was even closer to the stepson than to his own natural child. Unfortunately, the man died suddenly from late- diagnosed terminal cancer, and did not make a new Will before his death.

According to the man's verbal wishes before he died, he wanted everything he owned to be given to his new wife, and if she predeceased him, then to his child and his stepson in equal shares. Unfortunately, his failure to make a new valid Will meant that his home and sizeable cash and share portfolio were distributed according to the rules of "intestacy", and his verbal wishes had no influence in the process. The rules of intestacy are set out in the Administration and Probate Act 1958, and while somewhat complex, a few relevant issues are worth noting. According to the rules, if the deceased leaves children and a partner, then the surviving partner receives the personal possessions and the first $100,000 of assets and one third of the remainder. Given that couples more frequently elect to leave all their assets to the surviving spouse, this rule can have a huge impact on the surviving partner, including potentially removing him or her from the matrimonial home. Further, while the children (or grandchildren of pre-deceased children) share two-thirds of the remainder of the estate, this only includes "issue" of the deceased - biological children. It does not extend to stepchildren, meaning that these children would receive nothing. In our client's situation, the wife received the man's personal possessions and the first $100,000, and then took only a third of all that remained, with his child inheriting the remaining two thirds. It meant that the wife had to sell the family home and the deceased's stepson received nothing. The end result was very different to the gentleman's expressed wishes, and could easily have been avoided with proper estate planning. We note that there are many finer points which affect the broad formula of intestate succession provided here, and this summary should not be relied upon in understanding the rules of intestacy. We further note that the wife and the stepson could potentially have basis to make a Testator's Family Maintenance claim. However, this scenario simply highlights the need to conduct careful estate planning that allows for changes in domestic relationships and family situations and that will ensure your wishes are achieved.