We have a blended family; will that make our will more complicated?

Two heads of single-parent families coming together to form one blended family unit is always a cause for celebration.

However, while embarking on a new adventure together can be exciting for both parents and children, the legal implications of the new arrangement can go unconsidered. It still shocks a lot of people to learn in particular of the differences with which the law views individuals in that new family unit.

This is why creating a will should be one of the first things on your list when creating a blended family. This takes away any of the confusion or debate around what your intentions are for your assets, should you pass away.  While it is not very romantic, it is best to have an open and frank discussion on this topic so there are no surprises after your death.  This discussion may have to include your former or estranged spouse.

Getting things in order

But before you get started with putting a will together, there are many important things to keep in mind.  This type of will is usually more complicated as there are more people to consider and different legal and tax implications depending on whether or not the new couple are married or in a civil partnership.

If you are not married or in a civil partnership with your partner, even though you have brought your two families under the same roof, the law treats you differently than if you were married or in a civil partnership.

If you are not married, in the event of your death, your surviving partner will not be treated as your spouse in the eyes of the law.  This has social welfare, tax, and legal implications.

In these circumstances, surviving partners are liable to pay tax at a rate of 33% on inheritance over €16,250. There is tax relief for inheriting the family home called ‘dwelling house relief’ but there are technical requirements to qualify for this relief and not everybody qualifies for it.

It is vital to know whether assets (including the family home) are held in your sole name or joint names with your spouse/partner and also to understand the legal implications of holding an asset as joint tenants or tenants in common.  Specific legal advice is required to understand this.

What’s perhaps even more alarming is that if you die before finalising your legal separation or divorce from an estranged spouse, your estranged spouse will still be considered your spouse rather than your current partner.

Your spouse has an entitlement to a share of your estate and is protected under the law.  The share he/she is entitled to depends on whether you die testate (with a will) or intestate (without a will).  Therefore, it is important to tidy up your legal arrangements with an estranged spouse sooner rather than later as your estranged spouse could claim an inheritance if you die testate or intestate.

Consider the children

While it is common to leave everything to your spouse/partner on the assumption that they will provide for all of the children of the blended family in their own will, there is no guarantee that this is what will happen. The surviving spouse/partner could change their will after a deceased’s death, leaving little or nothing to the deceased’s own children.

Also, financial obligations such as nursing home care and tax liabilities can dissipate the value of an estate so when a surviving spouse/partner dies, the value of the Estate could have diminished over time, leaving much less than was originally anticipated.

Equally, it may not be an option for children to inherit ahead of a surviving spouse/partner as you may not have the financial assets to support your spouse/partner for their lifetime without access to all of your assets.

While you may love your biological children and children of your partner equally, our inheritance tax system only treats them the same if you are legally married or in a civil partnership with your partner.  If you are not married or in a civil partnership, despite the fact you may stipulate in your will that both sets of children are granted equal shares of your estate, the unfortunate reality is that they are not considered equal in terms of their liability to inheritance tax.

Your biological child falls under the Class A tax threshold, which allows them to receive up to €335,000 in tax free inheritance. Your stepchild will also fall into that Class A tax category if you are legally married or in a civil partnership with a parent of your stepchild or children.  This is a lifetime threshold for the child or children and doesn’t mean they can inherit multiples of this threshold.  This figure is not set in stone and does change from time to time, according to changes in the tax laws.

Meanwhile, if you are not legally married or in a civil partnership with a parent of your stepchild or children, any inheritance he or she is to receive, falls under the Class C threshold, meaning they can only receive €16,250 tax free.

Our tax system allows you to give a small gift of up to €3,000 in any year with no tax implications for you or whoever you gift the small gift to.  There is no requirement to limit this to people related to you by bloodline and this small gift exemption can be very tax efficient if you have the cash flow to make such a gift.

Complex and seemingly unfair situations in terms of tax and inheritance rights are not uncommon and can add to the grief and suffering of your loved ones. This is why it’s incumbent on you to make the necessary legal arrangements long ahead of time.  There are various trust structures that you can consider as an option for the passing of your assets to your loved ones.  These can be looked at as part of an overall review of your assets, liabilities, and probate planning process.

One thing to remember is if you and your partner do decide to change your status, your marriage or civil partnership is presumed to annul any will you created before the event unless the will was specifically worded to recognise an impending marriage or civil partnership.  It is also important to note that cohabitation doesn’t impact on a previous will, so it is important to amend any previous wills and be aware if your partner has made a prior will or not.

If you need more advice on how to protect your blended family in the event of your death, click here or call and arrange a chat with Marguerite on 044 9347655 or email info@buckleyandco.ie.

Please remember that this blog is written for information purposes in March 2024.  This area of law may be subject to change and specific legal advice should be sought in every case. 

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