Estate Planning for Blended Families
What are blended families?
In the United States, it is estimated that nearly half of Americans have been or will be included in a blended family at some point throughout their lifetime. Blended families are families that consist of a married couple with children from prior relationships - the most popular example being the Brady Bunch.
Estate Planning tips for blended families…
Every client’s situation is different, but the following factors should be taken into consideration when drafting estate planning documents for a blended family:
Defining Descendants. When you have both biological children and step-children, then you should specify how you want the term “child,” “descendant,” and/or “issue” to be defined in your estate planning documents. Failing to do so could intentionally omit or include beneficiaries that may differ from your original intentions.
Separate Trusts. Do you have all jointly owned assets or some separated assets? Most couples with substantial separate assets typically have separate trusts (as opposed to a joint trust) to account for their differing intentions and separate wealth accumulated prior to their current relationship. In other words, with a joint trust, it is possible for assets to be rerouted after your death to unintended beneficiaries based on the surviving spouse’s actions. So if you are concerned the surviving spouse might remarry or favor certain children more than others using joint trust assets during the remainder of his or her life (after you are gone) then you may want to consider having separate trusts with QTIP provisions in place.
Check and balance system. If the parents want to name a child as the successor trustee, then they should seriously consider having an independent trustee or secondary trustee in place who can make sure distributions and management of trust assets remain fair for all beneficiaries. Whereas if only one child is appointed trustee, then he or she may treat biological siblings differently than his or her step-siblings. You should also make sure that your trust has a spendthrift clause to reinforce this intention (and also protect against attachment from creditors).
Disproportionate Distributions. It’s likely that one spouse will come into a marriage with more assets than the other. It’s also possible that one spouse may have multiple children from a prior marriage whereas the other spouse may have one child or no kids from a previous marriage. In such a scenario, you need to carefully think through how you want to balance the unequal wealth between biological and non-biological children.
Talk it out. While you would hope that most families are open about what will happen to their assets after they are gone, it is very easy for the parents of a blended family to put off such conversations because they don’t want to deal with the tension of discussing their plans with all their children (there’s bound to be one that creates headaches). But that is why it is important to have these conversations now while you are still alive and able to do so. If it’s hard to talk about money with your family during your life, then it will be exponentially worse after you pass away. Sometimes it’s best to have delicate conversations one-on-one with each family member before doing a group discussion. That way you can identify and be aware of certain trigger points and understand each child’s perspective prior to the family meeting.
Everyone’s situation is unique, so if you are interested in learning more about how you can best prepare your family for the unknown, then give me a call at (781) 202-6368 or email JLento@PerennialTrust.com to schedule your free estate planning meeting.
Always happy to help.
Sincerely,
Joseph M. Lento, J.D.
Attorney & Owner of Perennial Estate Planning
Other helpful reading sources:
LINK: https://www.oppenheimer.com/news-media/2021/insight/april/estate-planning-for-blended-families.aspx
Carlson, Darren R. (2014). Your 1960S Tv Guide To Estate Planning. MOTIVATIONAL Press, INC.
