While PNAs are not legally binding in England and Wales, following some landmark cases, the Courts are giving greater weight to the existence of an agreement upon divorce, particularly when deciding the redistribution of a couple’s assets.
Formal agreements aside, it is vitally important to have open discussions between your family about what you may want to happen to assets in the event of a breakdown of marriage.
Couples who have children from previous relationships may want to ensure gifts or inheritance remains within the family, in the event of a divorce and family breakdown.
Therefore, it is extremely important for couples within blended family arrangements to not only discuss the proposed terms of a PNA with their new partner, but also with their children and step children so everyone is clear about what is being included in the agreement and why.
A family breakdown has a financial cost attached to it, as well as an emotional one. Such a drain on the family’s resources by paying legal fees is one many people are keen to avoid.
Second families
What to do if a parent wants to leave his/her estate to both sets of children, where older children from previous relationships have already had considerable hand outs?
In its 2017 report on marriages in England and Wales (published in April 2020), the Office for National Statistics noted that approximately one third of same-sex marriages were between couples where one or both parties had been married before. It is likely that many of these couples will have children from their previous relationships.
If an individual finds themselves with children from previous and current relationships, it is important that they do not overlook estate planning for when they die. Again, the thought of leaving behind warring half-siblings is, at best, uncomfortable and easily avoided with preparation.
It is very common for a testator’s children to inherit the residue of a person’s estate in circumstances where the testator’s spouse has predeceased them.
If older children have already received considerable financial help, it is possible still to include them in a will as beneficiaries, but to stipulate any handouts made during the testator’s lifetime are to be brought into account against the share of residue they receive under the will.
This means that children from a new relationship – provided of course they are also included as residuary beneficiaries – would not necessarily receive less than their half-siblings.
Careful will planning to protect a blended family also extends to the new spouse. A common tool is to set up a life interest trust in a will, whereby the spouse is given an interest in trust assets – usually the main home – for their lifetime (or until remarriage), which typically means the right to live in the property rent free and/or the right to receive income arising from it.
