NSW Trust Fund and Inheritance for Stepchild?

[snoop]

Hi all,

I have been advised by my Solicitor to leave something to a stepchild whom I and my kids have absolute minimal contact with. I have been advised that while "legally" he has no entitlement to my estate, he can still try to challenge things to obtain a cut. He did receive an inheritance when his Father passed away a few years ago, it amounted to 20% of the total estate which included the family home ( a little under $200,000 at the time). I have a set figure of 220,000 in my will for them. I am wondering whether I am able to drop this to 100,000, and then 50,000 in a couple of years without risking the will being challenged.

My main objective is to avoid the legal fees associated with such an activity. My kids are under 18, and I have a terminal illness so I have included the setup of a Trust as part of my will so that the kids are protected. In the coming months I will be coming into an inheritance. The figure will not be huge, but it will be enough for a deposit for an Investment Property...

Can I set up the Trust Fund now and purchase the property under the Trust Fund? Am I also able to move share stocks I have into the Trust Fund? I am wanting to minimise the amount in my estate as I know the stepchild will request copies of probate and copies of the total estate to see if they are able to obtain more. I know I may sound mean, but recent events - and their actions when their father passed - have highlighted the fact that where money is concerned people are not nice but greedy, and the only contact seems to be checking to see if I am still alive - and no contact with my kids.

 

[Scruff]

Your life - your assets - your will - your decision. I hope that statement is self explanatory in regard to the first part of your question.

In regard to your other concerns, I'll leave that to the experts.

 

[winston wolf]

Hi Snoop

The first question is what state you are in? NSW?

If the step child could successfully bring a Family Provision claim against your estate is very difficult to tell even after you passing and more so in advance.

It's very much up to the whim of the judge. It will depend on the size of the estate, the childs need and you relationship to the child(how long etc) and competing interests of others with a claim against the estate.

Without knowing the size of the estate of the financial position of the stepchild $220 sound like a generous offer. From what I see most estates under 3million will spend about 20% of the estate if it goes to court in NSW.

I'm not sure why the reducing benefit over time? Are you assuming the longer the separation the lesser the duty?

If there is a trust that you have created the executors to the best of my knowledge will be bound to disclose this to the plaintiff.

In NSW this will likely be seen as notional estate and up for redistribution. If not in NSW it can still be taken into account.

To the best of my knowledge the would have to be completely out of your control to be outside the estate (for 3 years in NSW)

 

[snoop]

Hi Winston,

Sorry have had a few medical issues and haven't been online for a while. I am in NSW

Here is my reasoning for dropping the amount over time. It has been just under 6 years since my husband passed away. Given Liam (Step Child) only received 20% value of the estate I was concerned - and advised they could - dispute the will for a higher cut if I passed soon after my husband. I also chose not to sell the family home but mortgage it to pay them off ( the family home was all of my husband's estate, we had no savings due to both of us fighting cancer and my husband not being able to work at all, thankfully I have been able to keep my job so far ).

I added them in with a set value, not a percentage to stop them from challenging the will. As the years go on though I thought I could lessen the amount. I was in the midst of chemo brain though when I made these decisions so I could be very wrong!

The reason I started looking at this in December was that my estate value has dropped due to a cancellation of life insurance on my Super. The drop is 500,000. I guess the crux of my question here is if I dropped them to $100,000 then could they still challenge the will? the value of the estate would be around the 1 to 1.5 mil based on todays market prices.

I know this all sounds mean, I am not being spiteful. I am trying to protect my kids from someone who really doesn't want to know them. He made a big show about adding them on facebook but has them on a restricted list so they can't see anything. They twigged on this when other family members started talking about his posts and they could not see the posts. He never remembers their birthdays and is still promising a visit for Christmas.

He has 3 other inheritances coming - my mother in law has already told me he is getting my husbands portion of her estate and our joint kids are not. I think they did not agree with the division of my husbands estate and expected me to sell the home and give him 50% - plus he has his Mother's/Step Fathers estate and he will receive a portion of an aunt's estate (has no kids) which is to be shared amongst all cousins which I am not sure if this includes my kids. My kids will get my estate and that is it.

To many questions, I know, and apologies for the emotion...

 

[winston wolf]

Hi Snoop

Nothing will absolutely stop a challenge and we cant see every eventuality.
Giving a step child $100K after they have already received an inheritance from their biological parent seems pretty balanced to me.

The inheritance they will/may get in the future wont count unless it happens prior to your passing.

It sounds like you are able to express this well so I would include it in the will. After that, what will be will be, and you will be better served not stressing over what you have little control.

 

[snoop]

Thanks Winston. I appreciate your feedback.