Adults and kids sitting on the grass in a gardenThe idea of “family” has changed dramatically over the last few generations. As a society, we’ve shifted away from thinking of family as a father, mother and children to one that—through divorce and remarriage(s)—can potentially comprise multiple sets of parents and offspring. Throw in the recent legalization of gay marriage and you’re looking at a smorgasbord of family structures known collectively as “blended families.”

Not surprisingly, estate planning has grown more complicated as a result.

What works for a traditional family set-up—i.e., Mom or Dad leaving everything to each other, then subsequently to their children—often doesn’t suit a blended family. Surviving spouses remarry, one set of kids fears being disinherited or having a stepparent blow through all “their” money, beloved heirlooms end up in the “wrong” hands, and resentment over how assets are managed or distributed leads to rifts and endless court dates.

So, “blenders,” what can you do to help your heirs keep the love—and their inheritance—while abiding by your wishes?

Combine smart estate planning with good, healthy communication.

Plan in Advance and Plan Smart
If you intend to remarry, consider meeting with your estate planning attorney to review all your options. The main goal? That each spouse’s share of the estate—and often specific items, like jewelry, art and other heirlooms—ends up with the beneficiary of his/her choice, while minimizing estate taxes.

Here are some possible topics to cover:

• A prenuptial agreement. As reported earlier this year in the Wall Street Journal, an increase in the number of blended families has led to a corresponding increase in prenups. Consider putting one in place, especially if you’re merging households and children.

• Your will. If you have children from a previous marriage, you may want to write your will in a way that guarantees them an inheritance from you—for example, by bequeathing 50% of your estate to them upon your death as opposed to making them wait for “leftovers” after your new spouse dies.

• Minor children. Be aware that minors can’t legally control assets and may require special estate planning strategies.

• Durable power of attorney. A DPOA lets you name someone to manage your financial and legal affairs should you become incapacitated. Make sure you update this if you’ve gone through divorce.

• Advance health care directive. This is similar to a DPOA, but lets you name someone to make decisions about your health care if you’re incapable of doing so.

• Trusts. Two types that are popular: 1) A revocable trust, which can be used to disperse assets as specified upon the owner’s death; 2) A qualified terminal interest property trust (QTIP trust), which can set aside assets for a surviving spouse, then later pass along remaining assets to your children.

• Life insurance and retirement accounts. The beneficiary forms for these determine who will receive a distribution upon your death. As with a DPOA, make sure to keep these updated. Also, life insurance can be a great way to provide for your spouse while leaving the balance of the estate to your kids (or vice versa).

Communicate and Do It Well
Estate planning can cause some awkward talk. But it’s a conversation that needs to take place, especially with blended families. So, call a family meeting. Let everyone know where they stand and how the estate will be divided after your death. Discuss who will be getting specific pieces of jewelry, art, furniture… whatever people care about, big and small. Or, if applicable, let them know that you’ve already prepared a written “Memorandum for Distribution of Tangible Personal Property” as part of your estate plan.

If there is a prenuptial agreement, sit down with your children to explain the terms and to prevent surprises. You may even wish to have your kids meet with your estate attorney, so they can get clear on issues such as “What is community versus separate property?” and “What are the rights of each (step)parent?” Such straightforward communication can go a long ways towards preventing future disputes.

Most importantly, be clear with family members that your estate plan reflects your wishes—and that you expect those wishes to be honored and respected.

All in the (Blended) Family
Creating an estate plan that lets you provide for all your loved ones can be tricky. This is exceptionally true for blended families. To ensure your family, however you define it, is set for the future the way you envision it, contact your estate planning attorney today. He or she can talk you through all the options and see to it that your wishes are carried out, harmoniously and without court involvement.

Post a Reply