Submitted by Saeed Little on
With divorce occurring in roughly 50% of all marriages in the U.S. and life expectancy increasing
every day, second—and even third—marriages are becoming quite common. When people get
remarried in mid-life and beyond, they often bring children from prior marriages into the mix.
Such unions are often referred to as a “blended” family or a “Brady Bunch” family.
But blended families can also take other forms. Whether you have stepchildren, adopted
children, children from a previous relationship, or you have someone you consider “kin,” even
though that individual might not be classified as your legal relative in the eyes of the law, these
are also examples of a blended family.
Whenever you merge two families into one, you are naturally going to encounter some
challenges and conflict. To this end, blended families present a number of particularly
challenging legal and financial issues from an estate planning perspective. Indeed, though all
families should have an estate plan, planning is absolutely essential for those with blended
families.
If you have a blended family and something happens to you, without a carefully considered
estate plan, your loved ones are at risk for significant misunderstanding and conflict. Your
assets could also be tied up in court, instead of passing to those you want to receive them.
Unless you are okay with setting your loved ones up for heartache, confusion, and pain when
something happens to you, you need an estate plan that’s intentionally designed by an
experienced lawyer (not an online document service) to keep your loved ones out of court and
out of conflict.
While you should meet with us, your estate planning lawyer, to plan for your particular family
situation, here are a few of the most common issues blended families should keep in mind
when creating or updating their estate plan.
1. Keeping Your Assets Separate
If you get remarried and have children from a previous marriage, you need to think about how
you want to balance providing for your new spouse and ensuring the children from your
previous marriage receive an inheritance from you in the event of your incapacity or when you
die.
If you intend to keep your assets separate so each spouse can pass an inheritance to his or her
own children, you’ll need to create and maintain separate financial accounts. For instance, one
account contains the assets you want to pass on to your children, and the other can be either a
separate or joint account that contains the assets you want to share with your new spouse.
Keep in mind, if you and your spouse commingle your income and assets, then the new spouse
will have claim and control of those assets when you die, which can easily leave your kids with
nothing. Moreover, joint accounts can be subject to claims from a former spouse and/or
creditors, so unless you want your new spouse to share that risk, keep at least some of your
assets separate.
If you’re keeping assets separate, be sure to talk with us, your estate planning law firm, about
the best ways to do that. It can get somewhat tricky, particularly when you are sharing some
assets and buying new assets together with your new spouse.
2. Issues With Inheritance Timing
If you have children for whom you want to leave an inheritance, you need to consider how and
when you want those assets to be passed on. For example, what would happen if you died
prematurely or if your spouse is significantly younger than you? Do you want your kids to wait
until your new spouse dies to receive their inheritance, or do you want them to receive it
immediately following your death? Perhaps you desire to create a hybrid in which your children
receive a small inheritance at the time of your death, and they receive the rest upon the death
of your new spouse, which could be many years in the future.
Establishing trusts for each spouse’s children can protect those assets and stipulate when the
kids receive their inheritance. You may want to provide your children with some of their
inheritance, such as proceeds from a life insurance policy, upon your death, and then release
the rest at some point in the future. Or if your kids are very young, you may decide to leave that
decision up to your spouse or a third-party successor trustee, who can better determine the
most advantageous time to pass on your children’s inheritance to them.
As your estate planning law firm, we will work with you, taking into account your unique family
dynamics, assets, and potential areas of risk and conflict to help you determine the optimal
time to pass on your wealth and other assets to your heirs to ensure it has the maximum
benefit for everyone involved.
3. Carefully Consider Your Trustees
A common scenario for blended families is for one spouse to set up a revocable living trust that
names themselves as the trustee during his or her lifetime, with the surviving spouse named as
successor trustee once the first spouse dies. Yet, this would leave all decisions related to the
trust assets to the surviving spouse, which could cause conflict with the children from your
prior marriage.
For example, the new spouse may choose to invest the trust assets conservatively, ensuring he
or she has enough money to live comfortably for a few decades, instead of investing the assets
for growth. On the other hand, the children—particularly if they are younger—might be better
off having the assets placed into higher-risk investments, which can offer better returns in the
long run, but leave less income for the surviving spouse.
In this case, it could be best to name a neutral third-party as successor trustee, so both your
children and surviving spouse’s interests can be balanced fairly.
4. Preventing Conflict
If you are in a second (or more) marriage, with children from a prior marriage, the conflicting
interests of your children and spouse can create serious strife between them in the event
something happens to you. To reduce the likelihood of conflict, your estate plan needs to
contain clear and unambiguous terms, spelling out the beneficiaries’ exact rights, along with
the rights and responsibilities of executors and/or trustees. Such precise terms help ensure all
parties know exactly what you intended.
Additionally, it’s essential that you meet with all affected parties within your blended family
while you’re still alive (and of sound mind) to clearly explain your wishes directly, if you hope
for your loved ones to love each other after you are gone. Sharing your intentions and hopes
for the future with your new spouse and children from a prior marriage can go a long way in
preventing disagreements over your wishes for each of them.
As your estate planning law firm, we can even facilitate these meetings to help ensure your
blended family maintains a harmonious relationship no matter what happens to you.
5. Planning For Incapacity
In addition to planning for your eventual death, you must also plan for your potential
incapacity. In this case, you’ll need to discuss how planning vehicles for your incapacity, such as
a durable financial power of attorney, medical power of attorney, and a living will should be
handled.
For example, if you become incapacitated, who would you want making your legal, financial,
and medical decisions for you? If your children are young, it’s best to leave those decisions up
to your surviving spouse. However, if your children are older, you may want them included in
the discussion of how such decisions will be made. You may prefer to name one of your adult
children as your decision maker, or you might divide the different duties between your spouse
and adult children.
Regardless of what you choose, we can help you to create an estate plan that ensures your
incapacity will be managed exactly how you would want in every possible scenario.
Bringing Families Together
Along with other major life events like births, deaths, and divorce, entering into a second (or
more) marriage requires you to carefully review and rework your estate plan. Updating your
plan is exponentially more important when there are children involved.
As your estate planning law firm, we’ve been specially trained to counsel blended families on
how to properly protect their assets in a manner that’s best for both the spouse and any
children involved. We will ensure that you and your new spouse can clearly document and
communicate your wishes to avoid any confusion or conflict over how assets and/or legal
agency will be managed and passed on in the event of one spouse’s death or incapacity.
If you have a blended family, or are in the process of merging two families into one, sit down
with us to discuss your different planning options. Contact us today to schedule your visit.
This article is a service of Saeed & Little, LLP. We do not just draft documents; we ensure you
make informed and empowered decisions about life and death, for yourself and the people you
love. That’s why we offer a Family Wealth Planning Session™, during which you will get more
financially organized than you’ve ever been before and make all the best choices for the people
you love. You can begin by calling our office today to schedule a Family Wealth Planning Session
and mention this article to find out how to get this $750 session at no charge.