Most people assume the most significant financial consequence of the end of a marriage or relationship is the property settlement.
However, property settlement is often only the beginning and is certainly not the end.
A Will drafted during the now defunct marriage or relationship may still be in place. Beneficiary nominations to superannuation funds may not have been reviewed for years. Trust structures may continue operating exactly as they were originally established, despite family circumstances changing significantly over time.
For many mining and resources professionals, those changes occur alongside substantial wealth creation. Superannuation grows, employee share schemes vest, investments increase and business interests become more valuable. Yet the legal arrangements surrounding that wealth are often reviewed far less frequently than the wealth itself.
This issue is becoming increasingly relevant as many successful Australians review their wealth structures in response to changing tax, superannuation and succession planning considerations. While investment and taxation strategies are often reviewed regularly, succession planning can be left behind as family circumstances evolve.
As a result, many people carry legal risks they are completely unaware of, especially if they enter into a new relationship. Not because they have avoided planning, but because their planning has not kept pace with their lives.
Why blended families create unique legal challenges
Blended families are an increasingly common part of Australian life. About 30% of marriages end in divorce and data shows that step and blended families account for a meaningful proportion of Australian households with children.
While every family is different, the legal challenges often follow a similar pattern.
Usually the person considering their estate plan wants to ensure their current partner is financially secure. They also want their children from their previous relationship to ultimately share in the wealth they have spent decades building.
The difficulty is that those outcomes do not always happen automatically, and often the law can intervene to cause an adverse outcome.
Consider this scenario. A mining executive leaves their estate to their current spouse, confident that any remaining wealth will eventually pass to their children from an earlier relationship. Years later, circumstances change. The surviving spouse re-partners and update their own arrangements, and the wealth ultimately follows a very different path from the one originally intended.
Nobody set out to create conflict, yet the outcome may be entirely different from what the deceased person expected.
In Queensland, the Succession Act 1981 (Qld) allows certain eligible persons to seek further provision from an estate in some circumstances. Eligible applicants may include spouses, children, stepchildren and certain dependants. While similar rights exist elsewhere in Australia, succession laws, eligible applicants and claim requirements vary between states and territories. Legal advice should always be obtained considering the jurisdiction relevant to your circumstances.
Many disputes arise not because people disagree about the value of an estate, but because they disagree about what the deceased person intended. Disputes can even arise despite the best intentions of all of the parties, living and dead. A third party such as the Australian Tax Office, a trustee in bankruptcy or a stepchild may make a claim against the deceased estate.
Mining and resources wealth adds another layer of complexity
Family complexity is only part of the story.
Many mining and resources professionals accumulate wealth across multiple structures over the course of their careers. Alongside the family home, there may be substantial superannuation, employee share schemes, investment portfolios, trusts, companies and business interests.
Importantly, not all these assets are controlled by a Will.
Superannuation is one of the most common examples. You do not “own” your superannuation. While they are governed by strict laws and rules, the trustee of the Superannuation Funds actually “owns” your superannuation. Superannuation death benefits are generally paid according to the rules of the fund and any valid beneficiary nomination. Without an appropriate nomination, the trustee may have discretion over who ultimately receives the benefit.
This often surprises people, particularly where superannuation forms a significant part of their overall wealth.
For example, a senior resources executive enters a new relationship following divorce and takes steps to update their superannuation nominations. Confident their affairs are in order, they assume their estate planning documents are aligned. However, their Will was prepared many years earlier and was never reviewed. While divorce can affect certain provisions of a Will as it relates to the divorced spouse, it does not necessarily invalidate the Will entirely.
As a result, the distribution of estate assets may not reflect their current intentions, despite the superannuation arrangements having been updated. The issue is not that any single document is wrong, but that the various components of the estate plan have not been reviewed together and with the current circumstances in mind.
Trusts can create similar challenges.
Many mining and resources professionals utilise trust structures for asset protection, succession planning or investment purposes. Yet one of the most important questions is often overlooked: who controls the trust if something happens to the current decision-maker?
In some cases, control of a trust can be more significant than the assets it holds, particularly where the trust has been used as the primary vehicle for accumulating family wealth.
As explored in our articles on trust structures and share ownership, succession is often about more than deciding who receives assets. It also involves determining who controls the structures that hold them.
The greatest risk is often false confidence
The families that find themselves facing succession disputes are rarely those who deliberately ignored estate planning.
More often, they are families who believed everything had already been taken care of.
There is a Will. There may even be trusts, companies and beneficiary nominations in place. Everyone assumes the arrangements still reflect current circumstances.
Then a death, illness or unexpected event occurs, and it becomes apparent that the legal framework no longer matches the family it is intended to protect.
This is particularly common where people have experienced separation, divorce, re-partnering or significant changes in wealth over time.
As we discussed in The $10.3 Million iPhone Will Case Every Mining and Resources Professional Must Know, assumptions and informal intentions can create significant problems when legal arrangements fail to keep pace with real life.
A lesson from practice…
Consider a senior resources executive who separates in their forties, divorces and later re-partners.
Over the following decade, they continue building wealth through superannuation, investments and executive incentive arrangements. Their respective children from their previous relationship become financially independent adults, establish careers and start families of their own. Their current partner becomes an increasingly important part of their financial life.
The original estate planning documents remain largely unchanged.
At first glance, everything appears to be in order.
However, if superannuation nominations, trust succession arrangements and estate planning documents have not been reviewed together, there is potential for conflict between their respective children and a genuine risk that outcomes may not reflect the person’s intentions as they are now.
There may also be broader questions about how inherited wealth is protected. If a child later experiences relationship breakdown, financial difficulties or creditor issues, should assets have passed directly to them, or would structures such as testamentary trusts have provided greater protection?
These are not issues most families think about while wealth is being accumulated. More commonly, they emerge later (sometimes too late), when circumstances have changed and important decisions can no longer be revisited.
When should you review your arrangements?
Estate planning is not a one-off exercise.
For mining and resources professionals, a review is often worthwhile following:
- separation or divorce
- entering a new relationship
- remarriage
- the birth of additional children or grandchildren
- receiving substantial employee share scheme allocations
- establishing a trust or company
- significant growth in superannuation or investment assets
- property purchases
- new business interests
- succession planning for a family business
The objective is not necessarily to change existing arrangements. It is to confirm they still reflect current intentions and current family circumstances.
Why collaboration matters
One of the realities of modern succession planning is that legal issues rarely exist in isolation.
A decision involving a Will may also affect superannuation. There may be jointly owned assets such as land or companies. A trust structure may have estate planning implications. Business ownership can influence both tax and succession outcomes.
That is why we work closely with financial advisers, accountants and other specialists to ensure legal structures align with a family’s broader goals.
At Resources Unearthed, this collaborative approach helps ensure wealth transfer strategies are considered in the context of the whole picture rather than in isolation.
Final thoughts
Blended family succession planning is not about choosing between a current partner and children from a previous relationship.
It is about recognising that families evolve, wealth grows and legal structures need to evolve as well.
For many mining and resources professionals, the greatest succession risk is not a lack of planning. It is the assumption that planning completed years ago still reflects the family and wealth structures that exist today.
The most effective estate plans are rarely the most complicated. They are the ones that continue to reflect a person’s intentions as life changes around them.
And in many cases, a simple review today may help avoid significant financial cost, legal disputes and family conflict tomorrow.
If you have experienced separation, re-partnering, remarriage, significant growth in wealth or have not reviewed your estate planning arrangements for several years, now may be an appropriate time to revisit whether your Will, superannuation nominations, trust structures and succession plans continue to reflect your intentions.
At Resources Unearthed, our legal, financial planning and accounting specialists work together to help mining and resources professionals navigate complex succession planning issues and create strategies aligned with their family, wealth and legacy objectives.
Need help navigating trust structures and ESS planning? Our legal adviser at Resources Unearthed is here to guide you. To arrange a time to meet with Robert Lamb please call 61 (0) 7 3007 2000 or email contact@resourcesunearthed.com.au
To learn more about Robert, visit this link.
Resources Unearthed is a solutions hub that provides integrated financial, legal, property, accounting and business advisory services for executives, professionals and business owners in the mining and resources sectors.
Disclaimer: This information is general in nature and does not take into account an individual’s personal situation. Each person’s situation is unique and each person needs to consider whether the information is appropriate to their needs, and where appropriate, seek professional advice from us, an accountant and a financial adviser.
