December 22nd, 2021
Blended families face unique estate planning challenges. As divorce and second marriages become increasingly common, more people find themselves raising children who are not biologically their own. Estate planning for blended families requires a skilled and knowledgeable attorney who will learn about you and your unique situation and create a plan to address your needs.
Estate Planning Challenges Facing Blended Families
In the most basic sense, a blended family is one in which a couple has children from a prior relationship. While the specifics may vary, the challenge is largely the same: there is a possibility that after you die, your spouse could cut your children out, leaving them with no inheritance.
Because of the complexities of planning for a blended family, people in this situation should address these challenges head-on in their estate plan. In fact, because of the unique challenges that face blended families, estate planning for blended families is arguably more important than for someone in a “traditional” family situation.
Cinderella: A Blended Family Gone Wrong
Cinderella is the quintessential story of what can go wrong in a blended family. In the fairy tale, Cinderella’s mother died, and her father remarried. When her father died, Cinderella’s stepmother prioritized her biological children, to Cinderella’s detriment. Even though Cinderella lived in her father’s home, she was treated as a servant. It’s not too hard to imagine that Cinderella’s stepmother would not leave anything to Cinderella in her will and that Cinderella would be disinherited.
But if Cinderella’s father had worked with an experienced estate planning attorney, he could have protected her inheritance, and she could have avoided being forced to work as a servant in her own home.
Estate Planning Strategies for Blended Families
If Cinderella’s father had consulted with an experienced estate planning attorney, he could have put a plan in place that would protect Cinderella and provide her with assets and freedom after he died. A lawyer can use various strategies to meet the needs of modern blended families.
Premarital and Marital Agreements
A premarital or marital agreement is entered into by the couple before or during the marriage. The agreement can specify the rights and responsibilities of each spouse during the marriage and can include living arrangements, the division of household and child-rearing expenses, and the rights and obligations of each spouse in the event of a divorce. A premarital or marital agreement can also specify the rights and obligations of the surviving spouse when one spouse dies, and how the estate of the deceased spouse will be handled.
In Cinderella’s case, the agreement could specify Cinderella’s living situation and require that assets be used to maintain her standard of living.
Wills and Trusts
A simple will is insufficient to address the needs of a modern blended family. Once the first spouse dies, the surviving spouse is free to modify the terms of his or her will so that only the children of the surviving spouse benefit.
But an experienced estate planning attorney can use a combination of a will and trust to create an estate plan that protects the interests of the children of both parents, regardless of which one dies first. A common strategy is to create a trust that leaves the assets to your surviving spouse during her lifetime, then passes the remaining assets to your children after she is gone.
Using Cinderella as an example, her father would create a trust for the benefit of the stepmother, with the remaining assets passing to Cinderella when the stepmother died.
To minimize conflicts between Cinderella and her stepmother, Cinderella’s father could have placed assets in a trust and appointed an independent trustee to oversee the assets. Cinderella would then have had sufficient assets to avoid being forced to be her stepmother’s servant.
He could have also identified an independent person to protect Cinderella’s interests as her personal representative or guardian.
Plan on Your Surviving Spouse Remarrying
If you go into estate planning assuming your spouse will remarry after your death, your estate plan will address the needs of your surviving children. You can protect them by leaving a financial legacy so they have the freedom and independence to make their own choices.
Leave Assets to Your Biological Children
Another option is to pass some assets directly to your biological children. You can be assured that they will receive some of your assets and will not be waiting for their stepparent to pass away.
If your children are minors or do not yet have the maturity to responsibly handle a large bequest, consider creating separate trusts for each child.
The Vander Laan Law Firm, LLC: Protecting What Matters Most
Modern blended families face unique estate planning challenges. With thoughtful and comprehensive estate planning, you can leave a financial legacy for your children while still providing for your surviving spouse.
Categories: Estate Planning