Estate Planning with Blended Families
It is estimated that about 65% of remarriages in America involve children, making them what we have come to call “blended families.” These families face unique challenges in planning how to protect loved ones and pass on assets to the next generation. Without a good estate plan, assets can be controlled by family members who don’t understand or may not value your goals and intentions, and worse, beloved members can be excluded from inheritance or left without adequate support.
When a parent of minor children re-marries, frequently the children’s other parent, the ex-spouse, continues to share custody. If the re-married parent dies, the ex-spouse will not only have custody of the children, but also may gain control of the assets inherited by the minor children. This result can be avoided by creating trusts for the benefit of the children and designating someone other than the ex-spouse as the trustee. Candidates for trustee include the new spouse, a sibling or grandparent. Planning and communication will also help you create a role for your current spouse in the children’s upbringing.
Another challenge for any blended family (those with minor children or adult children) is providing an inheritance to the children while ensuring long-term support for the current spouse. It is reasonable to expect that the loyalties between the children and a non-parent spouse are not as strong as the loyalties between a parent and child. If your surviving spouse inherits all of your assets, you can’t guarantee that some of those assets will ultimately pass to your children from a prior marriage. Similarly, if your children inherit all of your assets, you can’t ensure that they will use some of those assets to support your surviving spouse. Employing insurance to provide an inheritance and crafting trusts for the benefit of your spouse or children, allows you to best provide for your family if you passed away.
If rural land is an important asset in your blended family, specific strategies developed in your will or trust can ensure that the land is passed down and managed by the family members you deem most appropriate. In addition to designating who receives the land, you can set aside certain financial assets to assist your family in managing the land and avoiding partition.
These realities can be hard to discuss, but discussion and planning are critical to caring for the family that you love. We frequently guide blended families through this process, identifying priorities, protecting family members and assets, communicating with loved ones, and seamlessly passing family land to the next generation. While the family is together for this holiday season, have these important conversations with them. I would be happy to meet with you and your family to develop a plan that is specific to your family’s goals and needs.