Blended families, as a term, has come to replace the phrase ‘step-family’ in recent years. It describes those families in which two partners, each with their own children from previous relationships, enter into a new relationship – be it a marriage, a civil partnership or a cohabitation – and form a new, single-family unit.
In time, these ‘new’ partners may have children together and may get married or enter into a civil partnership, meaning that the family unit is comprised of children with three distinct sets of parentage. The welcome elimination of the taboo around issues like divorce, as reflected in the introduction of no-fault divorces in April 2022, means that the concept of a blended family is now seen as an accepted part of modern life.
The Office for National Statistics (ONS), states that, in 2020, only 63.2% of opposite-sex couples and 69.9% of same-sex couples were, on their wedding day, getting married for the first time, whilst, the UK step-family resource centre, Happy Steps, estimates that one in three UK families are now blended families.
Given these statistics it’s probably more important than ever to look at the issues which can arise within blended families when a parent dies, and the question of inheritance arises.
Non-traditional families and inheritance
In a ‘traditional’ family unit, such questions surrounding inheritance can be, although not always, more clear-cut – the first parent to die leaves their estate to the surviving parent, and when the surviving parent dies, everything is left to the children of the partnership.
In a blended family, there’s a good chance that things won’t be anything like this simple, and careful estate planning is required to ensure that the difficult process of coping with the death of a parent isn’t made even more difficult by a dispute over the division of their estate.
One of the reasons why the matter of inheritance in blended families can be trickier in England and Wales is the concept of testamentary freedom. In simple terms, this means that an individual is free to write a Will leaving their estate to anyone they choose – from spouses and children to the local dog’s home – with no legal obligation, for example, to provide for members of their family. Another reason is that the Rules of Intestacy do not make provision for non-blood relations including unmarried couples and step-children.
If the parties who have been disinherited, either by Will or by the Intestacy Rules, feel that they have been unfairly treated, then they could make a claim under the provisions of the Inheritance (Provision for Family and Dependants) Act 1975, and this right extends to the likes of spouses and children as well as anyone who was financially dependent upon the deceased.
Despite this potential (but very risky) safety net, the principle of testamentary freedom differs from the situation in many other countries – such as France, Scotland and Spain – in which the law often provides for “reserved rights” (of varying percentages of the estate of the deceased) to the benefit of certain beneficiaries such as spouse, parents or descendants . As such, it’s not difficult to foresee scenarios in which the combination of testamentary freedom and a blended family could easily lead to conflict, and even without conflict, lead to potentially adverse foreign inheritance tax liabilities
Best practice
Anyone wishing to avoid inter-family arguments following their death should write a Will – and this applies to blended and non-blended families alike.
Not writing a Will means that any estate you leave will be divided in line with the laws of intestacy, which will see the first £322,000 of any estate pass automatically to a spouse or civil partner, along with the possessions of the deceased.
Any portion of the estate worth more than £322,000 will then be divided between the spouse or civil partner and any surviving children of the deceased. This would mean that where there is a blended family, the children from any second marriage, or the children brought to the marriage by the surviving partner, and indeed an unmarried partner, could find themselves disinherited.
The issues around blended families and inheritance disputes, however, range far beyond the question of whether a Will has been written or not.
Imagine, for example, a scenario in which a widow with children from a first marriage remarries, and she and her new husband write Wills leaving the entirety of their estates to each other, and on the death of the last of them between all their children. When the widow dies, however, the husband remarries or loses touch with his step-children, so he writes a new Will leaving the whole of his estate (much of which was inherited from his first wife) to his blood relatives. The outcome being that when the husband dies, the widow’s children find themselves in a position of being left nothing from their mother’s estate.
The case of Miles vs Shearer, which was heard in the High Court in 2021, offers a real-world example of the kind of situation.
In this case, Mr Shearer gifted a sum to his two daughters from his first marriage while he was still alive, while informing them that he wouldn’t provide them with any more support. He then remarried and, on his death, left the vast bulk of his £2.2 million estate to his second wife.
The two adult daughters made a claim under the aforementioned Inheritance (Provision for Family and Dependants) Act 1975, attempting to obtain a ruling that ‘reasonable financial provision’ be made for them from their late father’s estate.
The case failed, with the judge ruling that neither claimant had demonstrated a financial requirement for maintenance beyond what could be achieved through an adjustment of their lifestyles.
As well as the details of the claimants’ earning potential and maintenance requirements, the judgement was based in large part on evidence that showed the deceased had expressed a clear and unambiguous intention for his adult daughters to receive no further financial provision from him, during his life or following his death.
This may seem a relatively extreme case, but the principle of testamentary freedom means that a similar outcome could easily arise, almost by accident, in any number of blended families following the death of a parent.
Mirror Wills
Within blended families it is important that all the parties are able to sit down and talk about estate planning prior to the event. Many people find conversations of this kind difficult, of course, but a huge number of the disputes which arise following the reading of a Will do so because the people who find themselves being disinherited had no idea that it was going to happen.
Many people don’t fully grasp the fact, for example, that if they and their spouse write what are known as ‘Mirror Wills’ – the standard arrangement in which each spouse leaves everything to the other – then following their death the surviving spouse will be free to completely rewrite their own Will.
In addition, other events such as the surviving spouse being declared bankrupt, requiring residential care, or remarrying and then divorcing and losing assets in a settlement, could have a huge impact on the size and value of any estate still left to pass on to the children from the first marriage. Careful and specialist estate planning can help to mitigate these possibilities.
Trusts
Another form of estate planning which could minimise the risk of inheritance disputes is the use of Trusts, which can be set up to protect assets and ensure that they are passed on as you wish them to be following your death.
One common option is a Life Interest Trust, which sees the surviving spouse either provided with an income from the estate, or given the use of an asset such as the family home, until their death. At this point, the remaining estate will be passed to the children of any first marriage.
This would protect those children, and can offer a flexible solution, as provisions can be included stating that the trustees are allowed to release more capital from the estate as and when needed, or that the surviving spouse is free to move house if they wish.
A Discretionary Trust, on the other hand, means that the estate in question can be distributed to a number of different beneficiaries. In most cases, a Trust of this kind is underpinned by a letter of wishes, in which you can set out guidance for the trustees on how the Trust will be distributed. Ultimately, however, letter of guidance or not, the trustees will have the ultimate power to decide how the funds from the estate should be distributed. Trustees must act unanimously, so it often makes sense to not choose family members, and instead appoint someone entirely independent, who will have no underlying interests in the Trust assets. Therefore, the careful consideration and choice of trustees is vital.
Although trusts can be a formidable idea in England and Wales, without proper advice and consideration they have the potential to create difficulties in civil law countries that do not recognise trusts.
Should you welcome the opportunity to discuss any of the above estate planning options or wish to obtain advice on any matters relating to Wills, Probate, divorce, or mediation, please do not hesitate to contact us for an impartial, confidential consultation.
