Estate Planning for Blended Families

There is a great need for estate planning for blended families. According to the U.S. Census Bureau, 1300 new stepfamilies are formed every day in the United States. Over 50% of families in the United States involve adults who are remarried or re-coupled. These so-called blended families can offer wonderful new relationships to people who are a part of them—and create tremendous conflict over inheritance when one of the partners in the couple passes away.

Even in so-called "intact" families, in which all the children are legally related to both of the parents, there can be conflict over inheritance, especially if one child receives more than another or is disinherited. In a blended family, the potential for conflict rises exponentially. There is sometimes unresolved hostility between one party's children and the new spouse, or between stepsiblings. Inequities, real or imagined, in the distribution of an estate can destroy what remains of relationships.

How Inheritance Can Go Wrong in Blended Families

Picture, for example, a father who has told his adult children after the end of his first marriage that he's "leaving everything" to them when he dies. Then he remarries, sells his house, and buys a new one together with his spouse, to be held as joint tenants with right of survivorship. She's also named as the beneficiary on his pension and his life insurance, and all their cash is in a joint bank account. Three years later, the father dies.

As promised, his will, executed before his remarriage, leaves his house, bank account, and personal property to his adult children. But the house he left them has been sold, and the new one, held in joint tenancy, passes directly to the new wife. So does the joint bank account. By law, the life insurance policy and pension pass to the named beneficiary on the policy or account, not to the beneficiaries of the will. The adult children receive none of these assets.

Let's imagine a different scenario involving these two spouses: both have children at the time they marry. Both sell their existing homes to purchase that new home together. Wife had a much larger, grander home, so she contributed more to the purchase of the new home, but they own it as joint tenants with rights of survivorship. They also put all their funds in joint bank accounts. Again, wife has contributed more, but they are in love, so who's keeping track? They live in wedded bliss for fifteen years until wife's death after the children are grown and gone.

Wife's children are chagrined to realize that their mother's contributions to the marriage go to her husband, not to them. But they're really outraged two years later when the husband dies, and all of "his" property, the house and the bank accounts, go straight to his legal heirs: his children.

These are just two unfortunately common ways that inheritance in blended families can lead to unintended outcomes. Things can be even worse when someone who has remarried deliberately tries to persuade their new spouse to leave everything to him or her and leave the children of the first marriage out in the cold. Likewise, adult children determined to protect "their" inheritance from a new stepparent can cause trouble in the new marriage.

Estate Planning to Preserve Harmony in Blended Families

If you have remarried or are considering doing so, there are a number of things you should consider with regard to your estate plan. The first is communication, both with your new spouse and with your adult children. The reality is, either you or your spouse will predecease the other. It's okay both to want to provide for a surviving spouse and for children from a first marriage, as well as for any children you and your new spouse may have together. What's most important is that you discuss your goals in this regard. It can be an uncomfortable topic, but it is an essential one.

If you need help sorting through these goals, your estate planning attorney may be able to help, asking you questions you hadn't thought of so that your estate plan is complete and does what you both intend it to do. Your attorney can introduce you to options of which you may have been unaware, including various types of trusts and the use of "in terrorem" or "no contest" clauses in a will to discourage will contests.

You'll have to decide together with your spouse how much of your estate plan you want to discuss with your respective children, but they should have at least a general idea of your plans. This serves several purposes. First, your children won't rely for years on an anticipated inheritance they shouldn't expect, then be blindsided (and possibly vengeful) when they don't receive it. If you are taking steps to safeguard certain assets for your children, letting them know that up front may reduce their anxiety about their inheritance and any simmering resentment toward your spouse from a false belief that he or she is after your assets. Discussing your estate plan up front with your adult children will also reduce the likelihood of a will contest based on an assertion that you were tricked or manipulated into making an estate plan that favors your spouse.

Whatever you choose to do, make sure you work with an experienced, ethical estate planning attorney. Having a solid, comprehensive estate plan in place will give you, your spouse, and your children peace of mind, and will hopefully promote a long, happy future together.

You may also be interested in:

• What is a Crummey Trust?
• Choosing an Estate Planning Attorney for Your Family Farm
• Who Needs an Irrevocable Trust?
• Titling Assets to Avoid Probate