Blended Families - Common Legal Issues

When family relationships are complex, it is really important to have clear, and effective ownership of property.

By Greta O'Connor, PR Law Associate (Invercargill), 27 January 2023. Greta specializes in family and relationship property.

Playing fair

One of the difficulties we often see as family lawyers is how to balance your obligations to your spouse or partner against your obligations to children from a prior relationship and sometimes against your children to your current partner.

The most effective way to deal with this is to own your property as tenants in common or enter into a contracting out agreement or both. When you purchase a property with another person you can own the property jointly or as tenants in common. Ordinarily a couple purchasing a property will do so jointly – where the contributions are unequal a contracting out agreement can be entered into.

What happens if you don’t do a contracting out agreement?

If a contracting out agreement is not entered into and one of the couple passes away the other will receive the property by survivorship – this means that the property (and that persons half share) does not form part of their estate and is not dealt with in their Will. Most of the time real estate is a person’s largest asset so this can present problems for estate administration.

If you are looking to purchase a property and you or your partner have children from previous relationships, it is very important to ensure you have framework in place to protect your assets for your children. A contracting out agreement will best provide this BUT the ownership structure of your assets is also important.

Get the ownership structure right

Contrary to owning property jointly, owning property as tenants in common allows your Will to deal with your share of the property however you wish. Commonly this includes providing your spouse or partner with a life interest in the property so that they can continue to reside in the property without being required to repay the estate. Upon the expiry of the life interest – usually resulting from the spouse or partner entering into a new relationship, vacating the property or passing away themselves, arrangements can then be made to sell the property and resolve the outstanding matters.

Get it right from the start

When entering into new relationships you need to carefully consider your respective financial positions at the start of the relationship particularly where one or both of you have children from previous relationships. Often even where there are good relationships with step parents, there is a conflict when it comes time to resolving estate issues.

If you want to find out more about what you can do to try and how to ensure your death doesn’t result in litigation between those you love, give the team at PrLaw a call