Blended Families and Rights of Occupancy

Wills and Blended Families: Safeguarding the Family Home and Supporting the Surviving Spouse

In blended families, drafting a will involves crucial decisions to ensure both the surviving spouse and children from previous relationships are adequately provided for. This is particularly important when the family home is the primary asset, and there is a need to balance flexibility and security for the surviving spouse with the inheritance rights of children and other beneficiaries.

Granting a Right to Occupy

A common approach is to grant the surviving spouse a right to occupy the family home. This legal arrangement allows the surviving spouse to continue living in the property after the first partner’s death. It can also provide options to sell the property and purchase a new home or use the proceeds for accommodation bonds or retirement village entry fees.

Understanding the Right to Occupy

In situations where the home is owned as tenants in common, each partner holds a specific share in the property, this can be either 50 / 50 or in any other proportion which can be based on each party’s contribution towards the purchase of the property. Partners may wish to leave their shares to their children while ensuring the surviving spouse can remain in the home. A right of occupation facilitates this balance.

Providing Flexibility for the Survivor

The right to occupy can be tailored to offer financial support to the surviving spouse. For instance, a will might direct the executor to invest any surplus from the property’s sale, providing the survivor with income for life. Upon the survivor’s death, beneficiaries receive their share of the property or its equivalent value.

If aged care is needed, the deceased partner’s share could be used as a loan for accommodation costs, repayable to the estate upon the survivor’s death. Decisions should be made regarding whether the estate should bear any potential loss if an aged care bond is not fully refunded. Conditions, such as entering a new relationship, can also be set to terminate the right of occupation, protecting the interests of all beneficiaries.

Addressing Mortgage and Insurance Considerations

Blended families often face complexities with mortgages on the family home. If the surviving spouse cannot manage mortgage payments alone, it may lead to financial hardship and a forced sale. Life insurance or mortgage protection insurance can prevent this, ensuring the surviving spouse is not burdened with repayments.

Balancing the Needs of Blended Families

Creating a will in a blended family requires careful consideration of the needs of the surviving spouse, children, and other beneficiaries. A simple right of occupation may not suffice, especially if no other financial provisions are made. Additional measures, such as monetary gifts or property funds using superannuation or life insurance, can ensure the surviving spouse has the resources for living expenses and home upkeep.

The Importance of Communication

Open communication between partners is vital to understanding each other’s wishes and financial needs. Discussing options like insurance, property funds, and financial arrangements ensures the survivor is supported without diminishing the legacy for children or other beneficiaries. Addressing these issues proactively can prevent costly estate litigation, reduce stress for the surviving spouse, and protect the estate’s value.

While a right to occupy the family home offers security, it should be part of a broader estate plan that includes life insurance, superannuation, and other financial provisions to adequately support both the surviving spouse and the estate’s beneficiaries.

At Solari & Stock, our Estate Planning lawyers can provide you with guidance and support to tailor your estate plan specifically to your family dynamics and needs. Please contact our Wills and Estate’s Team for further information or to make an appointment to speak with one of our experienced lawyers. Our Wills and Estates Team includes Michael Solari, Rebecca Exley, Nicole Commandeur and Valentina Abouzeid.

Article by Valentina Abouzeid.
Photo by Kevin Delvecchio on Unsplash