Insurance and Wills if in complicated marriage

Discussion in 'Wills & Estate Planning' started by Jane56, 14th Apr, 2020.

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  1. Jane56

    Jane56 Member

    14th Apr, 2020
    Hello Everyone,

    I have been a long watcher and have been reading a lot from this forum.
    I have a question on wills and insurances.
    • So basically, I do have a PPOR, some IPs, married and with 4 small children.
    • All properties have been bought in both names.50-50 ownership
    • We do have sizeable debts with the properties we have as they have all been purchased in the last 10 years.
    • I have discussed insurance and wills with my partner. However, my partner has different ideas to mine. My partner stated that they would rather leave their insurance money directly into the children's names rather than to pay for the houses, IPs, etc. or include me.
    • In addition, my partner might want to add his siblings/parents to their inheritance as well (mainly insurance and super).
    • My partner is a very secretive individual and I am anticipating some surprises in their will. I would rather assume that I am not in there and start planning likewise. For instance, i have no knowledge of their policy, how much they are covered etc.

    My concern is, assuming my partner passes away today, I do not want to be homeless with the kids and neither do I want to loose the PPOR, IPs especially if the bank will not lend me based on my salary ONLY.

    Personally, I have enough cover and I am sure that if I were to die, there will be enough money to cover for the properties as well as my children's funds. I would want the kids to remain in their home and not loose the IPs as well.

    Question to all:
    • What options do I have?
    • Is there a way to insure my partner in MY policy such that if they were to pass away, I would be paid out? That way, I will not worry about whether my partner would include me in their will or not?
    • My income is fairly decent, have no debts besides the home loans. However , I do not think that my income itself is insufficient enough to keep the properties in my name
    • However, my partner have some debts. Will their debts become mine once they pass away?
    • I am also planning on expanding my portfolio as well once this covid-19 situation has died down, but I would want to know what I am getting into.
    I wouldn't worry about this if both of us were to live for the next 10 years as I am sure that the debts would be smaller, more super, more income etc.

    Thank you for your assistance.
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    9th Jun, 2006
    Australia wide
    First thing to understand is that you and your partner are separate legal entities.
    They cannot direct what you do with your share and neither can you direct what they do.
    It might be good to try to coordinate but not necessary.

    Second thing is to work out if your properties are held as joint tenants or tenants in common.
    If JT when one dies the other inherits automatically no matter what is in the will.
    You can sever the JT so that you hold as TIC without any duty or CGT consequences so get legal advice on whether to do that or not.

    Thirdly where is the life insurance? If in super you will need to make sure your super ends up in the right hands as the insurance won't pass via the will - unless the trustee directs it to the estate. This could happen if the life insurance is held outside of super too.

    Other people's debts cannot become your debs, but they can reduce your inheritance.

    You should seek legal advice and draw up a will to implement your wishes when the time come.
    Also consider enduring powers of attorney and your super - which doesn't pass via the will.
    1961, Rugrat and The Y-man like this.
  3. jaydee

    jaydee Well-Known Member

    25th Mar, 2016
    I know it is difficult, but I am always surprised when people ask such personal questions on a public forum.

    You may love each other, but you are both obviously not on the same page. In that case, I suggest you either discuss and agree a direction yourselves or otherwise see a counsellor to try and put you on the same path.

    It is fine to have differing opinions, but ultimately you should be unanimous in your plans moving forward.

    It is also okay to have different wills.

    Many posters may have opinions, but only you both can decide for yourselves
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    9th Jun, 2006
    Australia wide
    There is no legal or moral need to have mirror or similar wills. But if you want to have some control over your share of the assets after you are gone you have to plan ahead otherwise if you die first and leave everything to the spouse your share of the assets will pass via their will when they go - assuming they don't die within 30 days of you.

    What you could do is to leave the asset on a testamentary discretionary trust so that they don't inherit directly and these assets will not pass via their wills.
    1961 likes this.