With lengthening life expectancies, better health in later years, and increasing divorce rates, it’s not surprising we’re seeing more “twilight relationships” blossom.
Just like at any other age and stage, though, romantic couplings in the senior years bring significant legal considerations – arguably, even more so. And that can be particularly the case if there are offspring from previous relationships.
First up, as we advise younger couples, it’s really important you address the legal ramifications of your relationship early on. Sure, it probably won’t be the most romantic of conversations, but checking each other’s take on the relationship, and putting the right legal mechanisms and protections in place, can prevent a messy, and costly, battle over assets should the relationship break down, or when one of you passes on.
As soon into the relationship as possible, take legal advice. Typically, a lawyer will want to know, firstly, if you have a Will, and secondly, that it’s up to date. A legal assessment should also include whether you have a Trust, and a review of that, given the budding relationship. A lawyer will also want to know if you have an Enduring Power of Attorney that needs to be updated in light of your new partner, and will likely recommend you have one drafted if this important protection is missing out of your legal toolkit.
More on this later, but if you separate, or when you die, your assets will be divided pursuant to the Property (Relationships) Act – that’s quite prescriptive, and often doesn’t suit the parties involved at all. So a legal assessment should also consider the merits of a “Contracting Out Agreement”, which, as long as it’s robust, allows you to depart from the law’s default provisions, and decide what your asset divvy-up should be in the event of separation, or death.
Every case is different and, especially in the case of twilight relationships, can become increasingly complex the more family members, assets and legal structures there are at play. To give you a general idea, though, here’s a look at some of the key considerations:
Wills
If you’ve entered into a relationship since the death of, or estrangement from, your previous spouse or partner, you’ll need to ensure your Will is up to date, and that they are no longer an executor or beneficiary.
You may want to appoint your new partner as an executor or beneficiary, or, if you have adult children, consider appointing one or more of them as executors.
If you have grandchildren, this can be a great time to consider whether you’d like them taken into account in your wishes.
Trusts
Now may also be the perfect opportunity to review your Trust deeds and ensure they are up to date. Key checks usually include:
- Is gifting complete?
- Are trustees still alive, mentally capable, or, in the case of professional trustees, in practice?
- Are the memoranda of wishes still relevant?
Depending where your relationship is at, you might want to discuss with your lawyer your new partner becoming a beneficiary of the Trust. Alternatively, it might be better, in your circumstances, to ensure what’s in your Trust goes solely to your children, and is protected from your new partner – or, as is more common, from their family.
It might also be timely to consider appointing your children as trustees and including any grandchildren as beneficiaries, or to ensure your Will or memorandum of wishes appoints them after your death.
Enduring Powers of Attorney
Firstly, it’s important you have an Enduring Power of Attorney and, next, that it’s reviewed in light of your new relationship.
You might want to look at whether it’s appropriate to have your current partner appointed to act on your behalf, or that provision is made that they be consulted or provided information on how your attorney is carrying out their duties.
Contracting Out Agreements
If you’re in a relationship with someone who has adult children from a previous marriage, especially if you have adult children from an earlier union, you may want to ensure your children’s interest in your estate and any Trust is protected.
As mentioned, typically people want this not so much to shut their new partner out from assets, but rather their partner’s children, who might be able to lay claim to your assets.
If you’ve been in a relationship for more than three years, that usually constitutes being de facto, and might mean parts of your asset pool have become classed as relationship property – especially if they’ve been accrued or obtained since the new relationship started.
This means that your partner (or their children) can elect to claim 50 percent of that property after your death, if you die first. The election the surviving partner has to make is whether they want to apply to have 50 percent of the deceased’s property transferred to them (Option A), or whether they accept what has been left to them under the deceased’s Will (Option B).
Conversely, if your partner dies first, it means you (or your children) can claim half of your partner’s estate.
What we often see happening in cases of a twilight relationship are unintended consequences – for example, separated parents have previously-agreed plans to provide for their children after they’re gone, but those wishes go out the door, without the right legal tools to support them, if one or both enter a new relationship.
We cannot draft Wills to prevent this, and it won’t be effective to set up a Trust now and put all your assets in it, if you’re already in a complying relationship. This, generally, leaves only one option to circumvent this risk: for you and your new partner to sign a “Contracting Out Agreement”, where, as mentioned, you contract out of the automatic provisions of the Property (Relationships) Act, which usually calls for assets to be divided 50-50.
You’ll both need to enlist the help of independent family or relationship property lawyers, make a list of all assets each of you own (together and separately) and then agree upon what is “separate property” – which wouldn’t be included in the division of assets – and “relationship property” – which would be included.
The lawyers will then draft up an agreement, advise you of its effects, and, if you want to proceed, witness your signatures on the document.
After that, all property identified as separate in that agreement – be it the likes of inheritances from parents, entitlements to Trusts, money earned or saved before the relationship began, vehicles owned – will be ringfenced in the event of a split. Assets that were transferred into a Trust prior to the start of the new relationship should also be treated as separate and not considered relationship property.
Don’t guess, check
My colleague, Gillian Stuart, has written a great piece on defacto relationships, and some of the common, and risky, misconceptions that can cause all sorts of problems – and huge losses – if there’s a break-up. She also outlines why “having the talk” and confirming the status of your relationship as early on as possible is vital.
The laws around asset division after a split or one of you dies apply just the same to a couple in their 20s, as they do to those in their 70s. Many people finding a new love in their more mature years have assets – sometimes substantial – and can bring all sorts of family make-ups, obligations and dynamics to the relationship.
It’s really important you not only have the correct legal tools in place for your situation – Wills, Trusts, Enduring Powers of Attorney and Contracting Out Agreements – but that you also have these documents properly reviewed in concert. To be effective, they must be current, relevant and line up with each other, and not have any gaps or loopholes that could crack open the protection you thought you had.