Passing on your estate to loved ones is often the final act of giving that you can do. Usually, this involves making provisions for your spouse, children, grandchildren, and others in your Will. Post-death, Wills can be contested and become a source of tension among those named (or not named) to receive your estate.  

It may seem spiteful to leave specific family members out of your Will, but there can be reasons why you feel it is necessary. Besides, it is your money. Why shouldn't you get the final say in who is the beneficiary of your estate?  

There are ways to provide for some family members and not others legally. But, it is worth cautioning that just because something is legally possible, it may not be in your family's best interests. The division of an estate can result in tension for those left behind who are facing the consequences of estate planning.

Generally, a family member's financial security is common knowledge within the extended family. Just because your child has gotten a divorce or has separated from a partner between the time of your death and the distribution of the estate, it does not sever their knowledge of your financial standing or any legal rights that person may have to part of your estate.  

A Will can contain several different types of trusts. Something to consider is a Divorce Protection Trust, which can delay or stop capital or income from going to a beneficiary experiencing divorce or separation proceedings.

During the divorce, the Family Court will view how assets came to be in a trust and who gave the money to the trust. If the assets in the trust were placed there by a member of the couple during the relationship, they are considered to be part of the marriage.  

With the Divorce Protection Trust, your children and grandchildren are seen to be beneficiaries of the trust but are not the owners of the trust. This limits legal access to this money as determined by the Family Court.  

There are all sorts of reasons you may want to bypass your children in your estate planning, some of which may cause your children to contest a will that does not list them as beneficiaries. To avoid such a scenario, create an insurance bond.  

Creating an insurance bond means that whatever you plan to leave to your grandchildren is considered a non-estate asset. The asset can then be transferred to an individual directly. As a non-estate asset, it does not form part of the estate assets that will be transferred as part of the Will.  

A de-facto partner is generally a partner who can show that they had a shared living arrangement that had them living together in one home with a shared sexual relationship during that time. The courts will consider if the couple shared any ownership of assets (such as property), domestic duties, or even if the community saw them as a couple.  

If a person dies without a Will (intestate), a de-facto has the same legal claim as a married spouse. The law views the de-facto as having a moral claim to the estate. If a person dies with a Will, the succession laws in each state are applied. The state law enables biological children, current and former spouses (a spouse can be married or de-facto partners) legal claims to contest a Will if they believe they have not been adequately included.  

As a spouse has a claim to shared assets, the Family Law court can order a division of property (assets and debts), meaning you cannot give away any of these shared assets.

For further reading: Legalwise, Sapience, Armstrong Legal, AMP 

All insights and information provided should be considered general advice for educational purposes only. As we are unaware of your personal circumstances, the information in this article should not be misconstrued as personalised financial advice. We recommend seeking advice from a qualified financial professional before making any major financial decisions.