Blended families, where there are children and spouses that have been through multiple marriages, come with estate planning conflicts that unblended families do not typically deal with. Children from previous marriages cut from wills, barred from seeing a sick parent, from attending a funeral, or inheriting part of a family business have all been issues that blended families have dealt with that come with complexities that an unblended estate plan does not have. With divorce and remarriage rates rising, the already delicate issue of inheritance can be an even bigger problem in blended families.
Blended Family Estate Planning
According to the National Stepfamily Resource Center, in the United States two out of every five marriages end in divorce, and almost half of all married people get married again at some point in their lives. In the unions of people who have married twice, around 65% involve children from prior marriages. This can make the transfer of brokerage accounts, real estate, and personal property very tricky.
The easiest way to avoid legal problems and family feuds between the surviving spouse and stepchildren is to share the details of the estate plan before a spouse’s death. It helps to explicitly communicate with your children that this is the plan that you want to have followed and deal with any issues that arise head-on. While it may lead to some uncomfortable conversations, there are ways to tackle the challenge of keeping the peace when dividing blended family wealth.
Focus on Fairness
Some remarried couples choose to leave the entirety of their estate to their biological children. However, many people want their surviving spouse to inherit some, or even all, of their wealth. Biological children often feel cheated when their step-parent receives the substantial bulk of the family estate, especially when the surviving spouse could leave some of that estate to their own biological children.
The easiest way to deal with this potential issue is to divide your estate so that your spouse and children each get something from the estate. It alleviates any potential bitterness and allows your children to enjoy their inheritance that you have left for them.
A well-crafted trust can increase the odds that children will not fight for a bigger share of the estate. For example, a QTIP trust gives all annual income from the estate to the surviving spouse but also lets you specify who gets the remainder at their death. Another option is to structure a trust to allow small distributions to be made to the children while the surviving spouse is still alive, allowing them to enjoy part of their inheritance before they grow old.
Keep Documents Up to Date
One of the most important things to do in a blended family estate plan is keeping all documents up to date. If you mistakenly leave the vacation house to your former spouse in the will or forget to make the change to a beneficiary form that property will pass to them at your death. Make sure that all titles records, accounts, and beneficiary designations are changed to reflect your new blended family.
Specify Medical, End-of-Life, and Burial Wishes
It is important to take a realistic look at family dynamics before making medical, end-of-life, and burial wishes in an estate plan. A remarried spouse named as healthcare proxy can keep the children from seeing their dying parent. In addition, the executor or durable power of attorney can have your remains buried or disposed of in a way that upsets your kids if you do not specify how you want these issues dealt with.