Blended Families and Estate Planning

Blended families have always been with us but even more so since divorce rates are now over 50% and are easier to obtain than in past decades. A blended family is created when the spouses bring to the marriage the children of their previous relationship(s) and who may decide to have children of the current relationship. When this occurs, you and your spouse should consider revising or creating strategies on how to leave your property or assets to your respective children when you pass away.

An experienced estate planning lawyer will discuss this with you, along with counsel you on applicable elder law and the laws on trusts and estates.  It is essential to discuss your intent on how your property is to pass at your death. The lack of a plan, or a flawed one, may create tension within the blended family which can be avoided with proper advanced planning. If you have a blended family or are about to remarry with children from both parties joining forces, there are some estate planning suggestions to follow:

1.  Pre-marital agreement

A pre-marital or prenuptial agreement is designed to allow for the distribution of assets and debts, if the parties separate or divorce. For instance, if you are both bringing certain assets to the marriage such as real property, a retirement plan, stocks, bonds, jewelry, valuable collections, or other significant personal property, then the agreement can specify and limit what assets the parties may retain for themselves. It can limit spousal maintenance but not child support and can provide how joint marital property and debts are to be divided.

2.  Reciprocal Last Will and Testaments

Reciprocal Last Will and Testaments between two people are basically mirror images of one another.  The spouses create their own Last Will and Testaments where one spouse leaves all assets to the surviving spouse and then upon death of the surviving spouse, all assets pass to all children equally.

This may or may not be a good option, especially for blended families. The problem with this arrangement is that the surviving spouse can then leave the assets to whomever he or she wishes by designating beneficiaries to a life insurance policy (or changing the beneficiaries) or retirement plan, thereby excluding the children of the deceased spouse.  Bank accounts and stocks can be jointly owned to the exclusion of other children.  If there are designated beneficiaries named on these asset accounts they will not be distributed in accordance with a Last Will and Testament.  Furthermore, the surviving spouse could create a new Last Will and Testament which will revoke the old one, thereby voiding the reciprocal Last Will and Testament. Litigation could subsequently ensue which may be expensive and divisive.

3.  Non-reciprocal Last Will and Testaments

Each Spouse in a blended family may prefer to have individual Last Will and Testaments whereby you can leave a share of your assets to the surviving spouse and a share to your assets to your own children, to the exclusion of the children of the other spouse. Before doing this, you should discuss this with everyone, so that this comes as no surprise when the time comes, after your death, to distribute the assets.  If you are the principal income owner or asset holder in the family, be sure that the surviving spouse has enough assets to live on comfortably.  In Massachusetts, spouses cannot be disinherited.

4.  Trusts

Creating a trust can be a great option. As trustee, you can control the trust during your lifetime but it becomes irrevocable when you pass away. The trust can provide financial support for the surviving spouse during his or her lifetime, with the remaining assets passing to all the children equally, or to your own children. A Trust can also take advantage of estate tax laws pertaining to marital assets. Deciding who should be the Trustee after you pass away, be it a surviving spouse, a child of the surviving spouse, or a bank/trust company, is an issue to be discussed with your estate planning lawyer.

Most couples will likely want the assets they each brought to the marriage to eventually pass to their own biological or adopted children. You can provide for your children by determining or estimating the percentage of the assets brought to the marriage and then leaving that percentage to your heirs. For instance, if you brought in 60% of the assets, then you could leave 60% of the remaining assets to your own children and 40% to the children of the other spouse.

Consult Estate Planning Lawyer Patricia Bloom-McDonald

Providing for a blended family with the appropriate estate planning strategies is complex. Simply leaving a Last Will and Testament may be insufficient.  Talk with estate planning lawyer Patricia Bloom-McDonald, a highly experienced elder law and estate planning attorney, who has worked with individuals and families regarding their estate planning goals for over 25 years.