It is not uncommon for couples to divorce and remarry. People will often bring children into a new marriage. These children can come from a prior marriage or union, or they may choose to have kids in their new marriage as well. This can be referred to as a blended family. Blended family estate planning is extremely important. Careful estate planning ensures that the needs of each spouse are met, as well as the needs of each parents’ children.
Blended Family Estate Planning with Significant Age Differences
If one spouse is significantly younger in a new marriage, the older spouse’s children may be close in age to the younger spouse, which can lead to resentment from either party regarding the estate. There can also be sibling rivalry between children of a parent and step-children. These relationships can cause more than friction between family members and can lead to bitter courtroom hearings when it comes time to determine who gets what from the estate.
Many parents will prefer that their assets go to their children and/or grandchildren before any step-kids. However, without careful estate planning, there is no guarantee that the kids will get what you want to leave behind. In fact, if couples don’t take the time for careful planning, this can have unintended consequences. For example, if they choose to create identical wills so their assets pass to the survivor of them, there is a significant chance the children of the dead spouse will be disinherited. Why? The surviving spouse can do with the estate as he/she pleases, and the result often leaves their stepchildren with nothing. We’ve seen it happen time and time again.
Poor planning can lead to a race for survival between spouses. When one is significantly older than the other, careful blended family estate planning becomes the key to ensure everyone gets their fair share.
Beneficiaries and Trusts for Blended Families
Another common circumstance among blended families is for each spouse to name the other as a beneficiary. Doing this will not allow the bank account, piece of property, or other assets to pass to anyone else, regardless of what their estate planning documents say. To avoid this, we recommend a trust.
A trust can allow a spouse/parent to “rule from the grave.” Upon the death of the first spouse, half of the trust assets can be locked down. Consequently, this makes them unavailable for the surviving spouse. With this type of blended family estate planning, each spouse can have the assurance that their share of the trust assets (or one half) will pass to their children, grandchildren or any other person they wish. The remaining assets are used for the surviving spouse, and will then pass as that spouse wishes.
At Michaelson Law, we help all kinds of families plan for their futures. We take the time to get to know you and your family. Doing this helps us to develop a complete understanding of each spouse’s wishes and needs. If you have a blended family or complicated estate, contact us, and together, we can create the best plan.