Things to ponder before you move in together
13 Aug 2013
The relationship status of my clients can change. Sometimes it's due to a relationship breakdown, other times it can be the death of a partner.
In respect to a death once the estate of the deceased has been finalised and the surviving partner is back on their feet financially and emotionally, there can come a time where a new relationship is formed. This is when things get interesting.
Putting aside the emotional issues this can create with the grieving children of the deceased, there are a number of financial and legal issues that over time need to be dealt with, or otherwise the inevitable 'train wreck' will occur. Now this is the stuff that can destroy families. As we all know, money can do funny things to people.
Experience has shown me that those who survive this process best are the ones that are the most transparent with their family and engage the necessary advisers to assist them where possible.
Take the example of a reasonably wealthy widow, with several children from a previous marriage. The children are grieving the loss of their father and in an unexpected turn of events, mum meets someone introduced by a mutual friend. The children are ok with it as they are pleased to see their mother has some company and can start enjoying her life again. Then one day the couple decide to get a bit more serious and move in together, into mum's house. Mum breaks the news to the children, most are fine with the decision but one child takes offence and relationships begin to get strained. Sound familiar?
One of two things will likely happen from here. More often than not the real issues behind the conflict are not dealt with and there can be a permanent shift in the family dynamics. However sometimes common sense prevails and the new couple will sit down with the children and explain their situation and ask what they can do to ease any concerns. For some children, the harsh reality is that their future inheritance may seem in jeopardy and they view the new partner suspiciously, particularly when it comes to finances, particularly where the new couple is not a financial 'match'.
This is where the advice of a specialist estate planning lawyer and a financial adviser can be very effective. They can get the various issues out on to the table and help have them resolved with the participation of the children.
Good estate planning should create a plan that provides some of the following solutions:
- Updated Wills for the new couple
- Enduring Powers of Attorney – often the mature aged children can be nominated as attorneys which can begin to alleviate their concerns of financial mismanagement or issues
- Superannuation Death Benefit Nominations –ensuring that the couple have valid and updated nominations
- Binding Financial Arrangements – assets introduced to a financial relationship can now be protected by the family court (in WA) in the event of relationship breakdown
- Mutual Will Deeds – can be used by married couples to restrict a surviving partner in a new relationship from changing their Will. Often the child beneficiaries have to give their approval for any changes to the step parent's Will.
This is obviously not an exhaustive list, and circumstances will vary depending on the family situation, entity structures and the financial complexities of the individuals involved. The main benefit in this type of planning is bringing the family together to discuss often very sensitive and emotive issues. By knowing that the children's concerns are being considered and procedures put in place to protect assets, the family can move on and focus on being a family again.
The issues will be very different for a single person with no children, but the same principles apply.
By being upfront and seeking specialist advice, families can be protected from often very nasty and bitter financial and emotional issues.
To learn more about Philip, view his online profile.