Mutual wills to help step-families
Step-family estate planning could be made easier through a mutual wills agreement, Townsends Business and Corporate Lawyers believes.
Townsends special counsel, Brian Hor, said departures from the original intent of a couple in a step-family could be prevented through a separate written agreement, often in the form of a deed.
The mutual wills agreement would agree that the survivor of a couple could not change their will after the first partner of the couple dies.
"If the survivor of them breaks the agreement and makes a new will that distributes the couple's combined estate contrary to what they had originally agreed together, then when the surviving spouse dies their estate will be held to honour the distribution originally agreed to by the couple under their mutual wills agreement — and this can be enforced by the beneficiaries under the original will," Hor said.
Hor said it was important in drafting the mutual will agreement to anticipate issues which may reduce the effectiveness of the agreement, or unfairly disadvantage the surviving spouse in the future.
Hor also said the big issue with the couple's superannuation death benefits was that usually they could be received tax free by a surviving spouse of the deceased member, but the tax would be payable if it went to adult non-dependent children of the deceased member.
"So if the couple want to give some of their superannuation death benefit to each other and the rest to their own respective adult children, they may decide to nominate each other to receive 100 per cent of their death benefit, on the understanding that the survivor of them will after receiving the whole death benefit tax free then give part of it to the children of the deceased. But how do you enforce this?" he said.
"They might decide to enter into a separate deed (effectively a mutual death benefits agreement) that says the survivor will give part of the death benefit to the deceased's children after they receive it from the relevant superannuation fund."
Recommended for you
With regional and rural suburbs exhibiting high spare capacity to invest, Money Management speaks to three regional advisers on the opportunities beyond the major cities and the importance of a strong network.
Platform consolidation is expected to accelerate among financial advisers this year, as software company Finura pinpoints which two platforms are set to be the winners, thanks to this trend.
The software provider has made several appointments in its APAC wealth propositions team, with a focus on driving growth across digital advice, Xplan and strategic partnerships.
The platform has announced it plans to close its Xplore managed discretionary account service in 2026 which holds $2 billion in funds under administration.
