Estate Planning in Blended Families
According to a Pew Research Study, more than 4 in 10 Americans are part of a blended family. And while 7 in 10 are satisfied with their step-family relationships, the study revealed that people typically feel a stronger sense of obligation to their biological families.
That’s what makes estate planning for blended families complicated.
If you have children from a prior relationship, and you make an outright distribution to your spouse, you risk disinheriting your children. Why? Because when you make an outright distribution to your spouse, your spouse has the power to do whatever he or she wants with the inherited assets. This may include leaving assets to your children, or not.
For example, suppose you and your spouse both have two children from prior marriages. You agree to identify each other’s children as your own children for purposes of your Will. You then make outright distributions to each other upon your death and name all four children as contingent beneficiaries.
Suppose after you die, your spouse and one of your children have a disagreement and become estranged. Your surviving spouse could change his or her Will and leave all the assets (including assets inherited from you) to his or her biological children only. Or perhaps your surviving spouse finds love again and remarries. He or she may decide to leave all assets (including assets inherited from you) to a new spouse rather than your children.
Below are a few tips to consider as you plan for the complexity of your unique blended family:
Determine your primary objective
The primary objective for some couples is providing for a surviving spouse. Perhaps you have been married for decades, your respective children are grown and successful, and you feel absolutely no obligation to leave your children an inheritance. If you have no concern whatsoever about the risk that your children could be disinherited, then an outright distribution may be an option.
On the other hand, if providing for your children is also important to you, leaving assets to your spouse in trust may be the better option. You can give your spouse access to the income, and perhaps the principal, from the trust to provide for his or her health, support, maintenance, or education, but direct that any remaining assets be distributed to your children after your surviving spouse dies.
Consider your spouse’s relationship with your children
Some blended families form when the couple’s children are very young. In those situations, a strong bond can form between the stepparent and stepchild. Other blended families form when children are already adults. In those situations, step-relations can be distant and contentious.
Which describes your family?
If your spouse has a strained relationship with your children and you make an outright distribution to your spouse, there is a greater risk that your children will be disinherited. In such a situation, consider a distribution to your spouse in trust with an independent trustee or co-trustee administering the trust assets. If there is a high level of distrust between your spouse and children, an independent trustee’s involvement may decrease the likelihood of conflict about the trust’s administration.
Consider making a bequest to your children at the outset
Rather than leaving all your assets to your surviving spouse, consider distributing a portion of your assets to your children immediately upon your death. This may include personal belongings such as family heirlooms or jewelry, real property that has been in your family for decades, financial assets, or a portion of the proceeds from a life insurance policy. This way, your children are provided for regardless of whether your surviving spouse makes any provisions for them.
This type of distribution may not be appropriate if an immediate distribution to your children may result in economic hardship for your spouse. In that case, leaving assets to your spouse in trust may be the best option.
Talk about your plans
Whether you are part of a nuclear or blended family, sharing the details of your estate plan can limit disagreements after your death. Yet it is a topic very few people broach with their loved ones.
The likelihood of dissatisfaction increases when heirs are kept in the dark about the details of an estate plan. An overwhelming majority of heirs report satisfaction the inheritance process when they know about the plans in advance. In contrast, heirs are twice as likely to be unsatisfied with the distribution process when plans are kept secret.
Estate planning for blended families can be complicated. An attorney can explain your options, the ramification of your choices, and customize an estate plan to address your needs.
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July 31, 2015 at 4:23pm
[…] The Complexity of Estate Planning in Blended Families – Rania Combs @raniacombs of Rania Combs Law in […]
November 12, 2022 at 12:38am
Blended family. Mom made a will back 2016 leaving everything to my step-dad. My brother and I were named as contingent beneficiaries if he passed before her. I was named the executor of her will. She passed in 2018. In July of 2022 my step-dad passed. He had a will also that was made in 2019 leaving to his three daughters. Now it’s in probate. Does my mom’s will come back into play for my brother and I? Probate lawyer is asking for information from my brother and I. If we weren’t on my step-dads will, why do they did our info unless my mom’s will comes back to play. Reading through your articles, I can’t find anything similar to were both parents have passed. Any info or where I can go to find info. Thank you
January 2, 2023 at 4:31pm
When one spouse’s Will makes an outright distribution of all property to a surviving spouse, the property belongs to the surviving spouse. At that point, the surviving spouse’s Will (or the intestacy statutes if they have no Will) controls what happens to the property after the surviving spouse dies.