So you are remarried and thinking about your estate plan. How do your thoughts differ than what they may have been when you married the first time? Should they differ and why? All experienced Estate Planning attorneys know how critical open discussion and planning is for success.
So, if you find yourself working on your estate plan, and you are married for the first time, you will most likely have easier decisions to make. Most parents in this very common situation will elect to have all of the assets in their estate pass first to their surviving spouse, and upon the death of the surviving spouse, equally to each of their children. Of course there will also be harder decisions to make too, such as determining who would serve as guardians of the children or trustees over the children’s property, but typically it’s easy to decide where the property will go.
Today, however, there are a growing number of blended families. These families may involve children from several marriages and this makes estate planning more complex. For example, the number of children involved and how many from each spouse is a factor. An uneven distribution of assets brought into the marriage from each spouse also may complicate matters. One spouse might be afraid to leave everything to their new partner out of a fear that upon death of the second spouse, that spouse will leave everything only to his or her biological children.
Here is another scenario. What if one of the spouses brings very young children into the marriage? The non-biological parent may raise those children, but unless formally adopted, for estate planning purposes, they are not considered the children of the non-biological parent. Therefore, if that parent dies without a will, the children will not inherit from the stepparent.
So while I am sure you can see that there may be complications, let me assure you that there are, indeed, many options for estate planning for blended families. And I am confident that we can develop plans that are fair and equitable for all!
So what do I recommend first. Well, I always tell my clients that there are some key documents that everyone needs to have in place. For those from blended families, a will is critical to have completed first. Without a will it is almost a foregone conclusion that if one spouse dies someone is going to be treated in an unfair manner. It is certainly normal for parents of blended families to wish to create wills in which half of everything is left to the husband’s children and half is left to the wife’s children. But this can still cause problems given some of the things mentioned above. Another unfortunate reality is that often times a surviving spouse will change his or her will at the death of the first spouse and cut the stepchildren out of the estate plan.
So how do we combat this? Well, one option is to use a trust. In that case all family assets are usually held in trust. Upon the death of the first spouse, the surviving spouse has the right to use the assets in the trust for support, with certain limits. For example, they may be limited in rights to income or limited use of the trust principal for living expenses. However, the surviving spouse will not be able to change the beneficiaries of the trust, and therefore the stepchildren cannot be disinherited.
A different way to address these concerns is to plan for a specific amount of money to be left to children at the death of the first spouse. In this scenario the children will not have to wait for the death of the stepparent in order to inherit. This works well in situations where more mature children are involved and where there is sufficient money for the surviving spouse to support herself without relying on the extra funds that are inherited by the children. We can use life insurance and other options to help here as well.
Estate planning with blended families is incredibly important! I also know from experience that each and every family is different. The first step is to begin the conversation. And, of course, communication in general is key to success. Some of these conversations can be difficult for one or both spouses, but we must get over this fear and recognize the need for good advance planning. Working with an Elder Law Attorney we can use proper planning techniques to avoid the minefield of hurt feelings and disappointments that are sure to arise in the future if planning is avoided!