Estate Planning for Blended Families
Getting married and blending families is tough. Doing proper estate planning for a “yours, mine and ours” family presents many special challenges. This article sets forth problems and provides solutions for what spouses can do when addressing concerns related to blended families.
In a “traditional” estate plan, each spouse provides for his or her assets to pass to the surviving spouse, with the understanding that the assets will go to the children at the surviving spouse’s death. This may work well when the spouses have only been married to each other, but it can spell disaster if your family is a blended family.
Most people want to take care of their spouse or life partner. This means that if you die first, you want your spouse to have access to all of your assets. But the majority of people also want their own children or other loved ones to inherit something. Many people do not realize how easy it is to accidentally disinherit loved ones.
Children can be inadvertently disinherited by the use of joint tenancy deeds on real estate (or joint ownership of bank accounts). Here is a common example: Husband (“H”) and Wife (“W”) have two children. H dies. W remarries Second Husband (“H2”). W wants to show her love and commitment to H2, so she retitles the house into her and H2’s name as joint tenants with right of survivorship. She also changes the ownership of her bank accounts to be jointly owned with H2. Then she dies. The house and bank accounts suddenly belong to H2. W’s children likely get nothing.
Using a well prepared trust, allows you to have significant flexibility and control over the disposition of your assets when you die or become incapacitated. Good estate planning can allow your spouse or partner to be cared for until his or her death, with assets retained in a sub-trust for the benefit of your spouse, then upon your spouse’s death, having your trustee distribute your share of the assets to your own children or to other beneficiaries you have selected.
Estate planning for a blended family does require extra planning and more thought and effort. However, when accomplished the completed estate plan provides peace of mind, knowing that you have provided for both your spouse or companion as well as the children you love.