By Dana M. Heyde
With divorce occurring in half of all marriages in the United States, second marriages are
becoming more common. With second marriages, people often bring children from prior
marriages into the mix. Such unions are often referred to as a “blended” family.
Blended families present a number of challenging legal and financial issues from an estate
planning perspective. Although all families should have an estate plan, planning is absolutely
essential for those with blended families.
Blended families can also mean stepchildren, adopted children, children from a previous
relationship, or you have someone you consider “kin,” even though that individual might not be
your legal relative in the eyes of the law.
If you have a blended family and something happens to you, your loved ones are at risk for
significant misunderstandings and conflict if you do not have a carefully considered estate plan.
You need an estate plan designed specifically for you by an experienced lawyer to keep your
loved ones out of court and out of conflict. Online document services cannot provide the same
protection. The attorneys at Cottle Keen Lopiccolo and Heyde, LLP can prepare a plan specific
to your family situation.
Here are 5 of the most common issues blended families should keep in mind when creating their
estate plan.
1. Keeping Your Assets Separate
If you get remarried and have children from a previous marriage, you need to think about how
you want to balance providing for your new spouse with ensuring the children from your
previous marriage receive an inheritance from you. Keeping your assets separate allows each
spouse to pass an inheritance to his or her own children, bur requires that you create and
maintain separate financial accounts.
Keep in mind, if you and your spouse commingle your income and assets, then the new spouse
will have claim and control of those assets when you die, which can easily leave your kids with
nothing. Moreover, joint accounts can be subject to claims from a former spouse and/or
creditors, so unless you want your new spouse to share that risk, keep some of your assets
separate.
Be sure to talk with the attorneys at CKLH about the pros and cons of separate accounts.
2. Issues With Inheritance Timing
If you want to leave an inheritance to your children, you need to consider how and when you
want those assets to be passed on. For example, what would happen if you die prematurely or if
your spouse is significantly younger than you? Do you want your kids to wait until your new
spouse dies to receive their inheritance, or do you want them to receive it immediately following
your death?
Establishing trusts for each spouse’s children can protect those assets and include the time frame
that sets out when each child will receive their inheritance. You may want to provide your
children with some of their inheritance early on to be used for their college, wedding, or first
house. If your kids are very young, you may decide to allow your spouse or a third-party
successor trustee to determine the best time to for your children to inherit.
The attorneys at CKLH consider your unique family dynamics, assets, and potential areas of risk
to help you determine the best time to pass on your wealth to your heirs.
3. Carefully Consider Your Trustees
A common scenario for blended families is for one spouse to set up a revocable living trust that
names themselves as the trustee during his or her lifetime, with the surviving spouse named as
successor trustee once the first spouse dies. This leaves all decisions related to the trust assets to
the surviving spouse, which could cause conflict with the children from your prior marriage.
For example, the new spouse may choose to invest the trust assets conservatively, ensuring he
has enough money to live comfortably for a few decades, instead of investing the assets for
growth. On the other hand, the children might be better off having the assets placed into higher-
risk investments that yield more returns, but leave less income for the surviving spouse.
4. Preventing Conflict
If you are in a second marriage, with children from a prior marriage, the conflicting interests of
your children and spouse can create serious strife between them in the event something happens
to you. To reduce the likelihood of conflict, your estate plan needs to contain clear and
unambiguous terms regarding the rights of the beneficiaries and the responsibilities of the
trustees.
Additionally, it is essential that you meet with all affected parties within your blended family
while you are still alive (and of sound mind) to clearly explain your wishes directly. Sharing
your intentions and hopes for the future with your new spouse and children from a prior marriage
can help prevent disagreements over your wishes for each of them.
The attorneys at CKLH use precise terms to ensure all parties know exactly what you intended.
We can facilitate family meetings so your blended family maintains a harmonious relationship
after you are gone.
5. Estate Planning For Incapacity
In addition to planning for your eventual death, you must also plan for your potential incapacity.
You will need to decide how to plan for your incapacity, such as a durable financial power of
attorney, medical power of attorney, and a living will.
For example, if you become incapacitated, who would you want making your legal, financial,
and medical decisions? If your children are young, it might be best to leave those decisions to
your surviving spouse. Or you may prefer to name one of your adult children as your decision
maker, or you might divide the different duties between your spouse and adult children.
The attorneys at CKLH can create an estate plan that ensures your incapacity will be managed
exactly how you would want.
Bringing Families Together
The attorneys at CKLH specialize in counseling blended families on how to properly protect
their assets in a way that is right for the dynamics of your family. If you have a blended family or
are in the process of merging two families into one, sit down with us to discuss your different
planning options. Contact us today to schedule your visit.
At Cottle Keen Lopiccolo & Heyde, LLP we don’t just create an estate plan, we create a wealth
legacy. We ensure you have the information to make informed and empowered decisions about
life and death for yourself and the people you love. Our Family Wealth Planning Sessions are
designed specifically for you to enable you make the best choices possible. You can begin by
contacting our office today to schedule a Family Wealth Planning Session. Mention this article
to find out how to get this $750 session at no charge.
