Estate Planning for a Blended Family: Important Questions to Ask

Estate Planning for a Blended Family: Part 1 of a 4 Part Series Addressing the Special Needs of Blended Families

Questions that can Affect the Estate Plan of a Blended Family:

A blended family means one or both of the partners have children from a prior relationship. Parents are often faced with a competing interest to care for their partner and also leave a legacy for their children shared with a previous partner. Even when a family has a common vision of what they want to happen after their deaths, unforeseeable or intervening circumstances can arise.

Discussing your Will, Powers of Attorney, and who should care for your children if you die, can bring up some challenging questions, but having a plan in place is vital to minimize the stress and conflict during a very difficult time after a loved one dies. I find many clients hold off on meeting with me because they were not sure how to answer some of these questions. In reality, there are lots of possible solutions and my job is to help you find the best one for your family. So don’t postpone meeting with an attorney while trying to figure it all out on your own.

Focusing on what your personal goals are, how that matches up with your partner’s goals and how well the members of the blended family get along are good places to begin the planning discussion. If you have a good relationship with children from a previous marriage, there may be less concern about an adversarial conflicts after the death of the parent spouse. Whereas, if there is already tension between a new partner and the children from a prior relationship, careful planning is important to avoiding bitter emotional battles and costly litigation after death.

In addition to the unique situations that will affect the emotional and financial relationship between partners and spouses, some of the more common factors to consider that may affect an estate plan are:

  1. All Adults.  Did you meet later in life with grown children?  In this case your children may be self-sufficient.  If wealth was accumulated primarily before the marriage there could be a need for conflict mitigation between your children and a new spouse.
  1. Young Spouses. Are you both younger with a chance of remarriage if one of you dies? Perhaps a trust should be considered for a portion of the assets to protect the support needs of young children from a future marriage. Additional asset protection can be added by naming a trustee who is not the surviving spouse.
  1. Young Children. How old are the children from each marriage; are some self-sufficient while others need support and care? Is there a child with special needs? These situations may also benefit from creating a trust for a child with a legal or medical disability.
  1. Compromises by One Spouse. Did one spouse give up a job or relocate to be with the other? Does one spouse require significant medical care that the other is providing? Both of these situations can create a sense of entitlement from the spouse who is giving up something.
  1. Equal or Unequal Assets. Did the spouses have fairly equal assets when entering the marriage, or did one spouse bring in the majority of the wealth? Focusing on the each spouse’s attachment to financial assets and desire to provide financial support to a surviving spouse are key elements to avoiding probate litigation.
  1. Maintaining the Lifestyle. How easy will it be to maintain the current lifestyle if a partner dies; and are the spouse’s open to adapting to less enriched circumstances? A dramatic change in lifestyle can create tension between a surviving spouse and children from a prior relationship.
  1. Family Business Involved. Does one spouse own a family business with children from a prior relationship?  Does one spouse works at the others company, but is not an owner. In this situation consideration as to how the assets and tax consequences should be divided will ensure both the parties are treated equitably.

Please check back for future posts on what estate planning formulas address the situations described above, how a Martial or Pre-Nuptuial Agreement can help squash conflicts before they starts and what a disinherited spouse has a right to claim under Colorado law. Posted on April 8, 2015