Many individuals within blended families believe that having a will is sufficient. It isn’t, and the discrepancies between your intentions and the actual legal circumstances may inadvertently disinherit the children you wanted to provide for.
How Property Ownership Can Override Your Will
The survivorship rule is one of the most dangerous risks in estate planning for blended families that nobody has ever heard of unless you’re in the business or have been touched by it. It’s effectively a default inheritance model that, if you don’t change it, screws your own kids out of their inheritance.
The rule says that if two people own a piece of property together, say a house, as joint tenants, when one of them dies, the surviving owner automatically becomes the sole owner. Here’s the kicker: the dead guy’s will doesn’t apply, so their kids don’t get their share and can be totally disinherited. This isn’t a big deal if your partner simply quietly moves on with their life and eventually leaves the house to their own kids when they pass.
But woe betide you if they see a lawyer and make out a new will leaving it all to their own offspring. Your kids just got robbed. And not by the government or some evil lawyer, but by you. For your ignorance in automatically signing up to this legal bequest system that no one ever explained to you.
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Pre-Marriage Agreements and Family Provision Claims
When someone enters a new relationship with existing wealth, a property, a business, an inheritance, a Binding Financial Agreement (BFA) establishes from the outset what belongs to whom. This protects both partners by making asset division explicit before emotions and assumptions take hold. Working with a family lawyer Sydney is essential at this stage, because a BFA that isn’t properly drafted and executed is easily challenged later.
Even with very careful planning, an estate can still face legal challenge. Under NSW succession law, eligible persons, which can include ex-spouses, stepchildren who were financially dependent on the deceased, and current partners, can bring a Family Provision Claim contesting the will. These claims are expensive, time-consuming and genuinely capable of dismantling a well-intentioned estate plan.
The most effective defence is proactive structuring: clear documentation of your intentions, properly executed trusts, BDBNs in place, and legal instruments that make the distribution logic hard to unpick in court.
Stepchildren Have no Automatic Inheritance Rights
If someone passes away without a legally valid will, intestacy laws step in to specify which part of the estate goes to whom. In Australia, these intestacy laws vary slightly from state to state, but none of them include stepchildren as beneficiaries. This means that under the default intestacy rules, a stepchild has no automatic legal entitlement to any part of a stepparent’s estate, regardless of how long they lived together or how caring their relationship was.
Worryingly, this gap in the law applies regardless of whether or not the deceased had a legally valid will. So, even if you and your stepparent were exceptionally close, it does not automatically mean that you will receive any inheritance if they die without a will.
Superannuation Won’t Follow Your Will
Many people are unaware that superannuation is not automatically part of the estate. It is completely separate from the will, so the fund trustee decides where it goes unless there is a Binding Death Benefit Nomination (BDBN).
A BDBN provides the fund with legally binding instructions on who should receive the death benefit, a specific person or the estate. If there is no BDBN, the fund trustee can decide to give it to anyone they consider dependent, which may not align with your intentions. In the case of a blended family, this could be a prominent issue. Having BDBNs for superannuation and life insurance is not something to consider, it is a must-do in your planning for basic protection.
Trusts That Balance Competing Needs
The tension you’re probably feeling comes from caring deeply about your current partner’s financial security after you die and that of your biological children. The two things don’t have to conflict.
A Life Interest Trust guarantees your new spouse can live in the family home for the rest of their life, and crucially that they can’t be forced to move out by your children or other beneficiaries. Meanwhile, ownership of the property is preserved for your children from your previous relationship, as you intended.
When your spouse dies or leaves the property (for example, to move into aged care), the property automatically passes to your children. The only thing your spouse can access is the income generated by investing any surplus money from the sale of your joint property pool.
For more complex asset pools, or where there is more at stake than a single asset that is clearly intended for your children, a Testamentary Discretionary Trust established inside your will can take control of the investments and the income and capital distributions. This makes sure your new partner can’t access and potentially lose an asset that you wanted to stay in your children’s hands.
Getting Ahead of it
Planning matters. Separating the wedding from the estate planning procedure is a good start. Have the tough conversations, clarify your wishes and then give the legal planner instructions. They can develop a set up that will support what you want to occur. It’s easier, and cheaper, to do it this way than to try to sort it out after the event.