‘Mum’s partner is attempting to cut me out of her estate. What can I do?’

Jul 29, 2020
Wills that deal with the same assets in different ways can sometimes be a recipe for disaster. Source: Getty.

Q: My mum is due to receive an inheritance of around $500,000. Her and her partner (not my biological dad) have a mortgage of around $250,000 on a property that’s valued at approximately $700,000, which they bought for $420,000 using my mother’s partner’s inheritance of $105,000. Both parties have since paid half the mortgage and my mum pays all the bills.

Mum’s partner wants her to put her inheritance towards the mortgage and renovations, essentially using most of the $500,000. Mum’s will says the house is left solely to her partner however if he has passed away it transfers to my sister and myself equally.

However, her partner’s will states that if mum has passed only 50 per cent would be split between my sister and I and the other 50 per cent split between his three children, who he has had no contact with since they were little (approximately 30 years). Mum is concerned that her inheritance (which she received via a will that stated that if mum passed away before receiving, the money would go to my sister and I) would then be halved and go to the partner’s children who she doesn’t know.

Is there a way this money can be protected and not be left to the spouse if added to the primary residence, to avoid having around $400,000 sitting in cash that will affect her eligibility for the Age Pension?

A: As is often the case, your question raises the need for both legal and financial advice. Lawyers can’t give financial advice and financial advisers can’t give legal advice. Your question and the facts you’ve given are a common scenario in blended families. In the legal advice space, I would need further information to give a fuller response but, to the extent of what you have provided, there are two major issues – Centrelink and your mum’s and her partner’s wills.

So far as Centrelink is concerned, the inheritance may well affect her Age Pension entitlement if it is not put into an exempt asset such as the home where she lives. Otherwise, there is little that can be done effectively to avoid or reduce the effect on her pension of so much money sitting in her bank account. But that is a matter for financial advice.

In respect to the wills, it is always difficult, and sometimes inappropriate, to try to influence what a person puts in their will. Having said that, in the current state of their wills, your mother’s concern is valid one. If she died before her partner, his will would not appear to be what your mum would want. There are legal devices you can use to address that issue, but time and space do not permit any detail.

The devices themselves, though, can have adverse impacts as well on your mum and her partner’s existing relationship. It would be highly advisable for your mother to seek immediate legal advice on what those techniques are and if they are appropriate for her. Only she can do that, not you.

If you have a question for Starts at 60’s money experts, email it to [email protected].

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.

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