Whether due to the death of a spouse or through divorce, blended families now outnumber traditional nuclear families. And the number is likely to grow, based on current statistics and trends. Estate planning for blended families presents many unique challenges that must be considered and addressed with a fully thought out, well designed estate plan. Unfortunately, often little attention is paid to the critical estate planning challenges confronting blended families. These challenges include disinheriting your ex-spouse, protecting your children, and preventing fights between the families.
If you have young children, without proper legal planning, your ex-spouse (as surviving parent/guardian) would likely be appointed by the probate court to manage the inheritance you leave to them. To make matters worse, what if your children later predecease your ex-spouse, don’t do their own planning, and are single and childless at that time? Who would inherit your assets then? That is right… your ex-spouse, as the next-of-kin of your children.
If your children are grown, you may be considered about how they will get along with your new spouse, or your spouse’s children, if something were to happen to you. Without a plan in place, often families end up fighting because there is no clear decision maker and there is no plan created ahead of time, so they do not know what you would want.
The other area where we see a lot of fights has to do with the property you and/or your spouse brought to your marriage. In the absence of a premarital agreement to maintain separate assets, most spouses in blended families tend to blend their wealth. For example, they title their respective assets in the names of both spouses and also designate one another as the primary beneficiary of their respective retirement plans and life insurance policies. This can be a disaster without a well thought out estate plan.
Warning: If you predecease your new spouse, then you may forever disinherit your own children from your share of such blended wealth! Thereafter, upon the death of your new spouse, your assets may be inherited by your stepchildren, or even by your new spouse’s next spouse and their children. Yes, things can get complicated – and fast!
Additionally, regardless of whether children are raised in a traditional nuclear family or in a blended family, great care should be given to protect any inheritance both for them and from them. For starters, wealth representing a lifetime of your hard work and thrift can be squandered in very short order. Dollars earned just spend differently than dollars inherited. In addition to good old-fashioned squandering, an inheritance can quickly vanish through divorces, lawsuits and bankruptcies.
Fortunately, with proper and careful estate planning, you can both honor your vows to your new spouse, protect your children, and ensure that everyone will get along after you are gone. Schedule a consultation today to discuss your family’s unique circumstances and have your questions answered.