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Estate Planning With a Blended Family

Blended Families on the Rise

The modern day phenomenon of blended families occurs when a husband, wife, or both spouses bring children and assets into a marriage, as well as family from prior relationships or marriages. This family type actually numbers greater than the number of traditional nuclear families in the United States today. The trend of skyrocketing growth for blended families is anticipated to continue, as divorce rates are rising, people are living longer, and there are larger populations of single, divorced, and widowed individuals.

Blended Families Face Complexities and Challenges in Estate Planning

When it comes time to plan estates of blended families, care must be taken for some complexities and challenges unique to this family type. The circumstances that led to the merger of multiple families, such as divorce or a prior spouse's death, can add emotional and psychological elements to already challenging monetary-based decision-making. Non-monetary considerations can have unpredictable and significant impacts upon the blended family and need to be addressed with equal care and attention.

Financial planning and preparing estate plans can become complicated even when the blended family members interact well together and appear harmonious. There is always a possibility of suspicion and doubt among family members, as well as skepticism between siblings. The potential for negativity or unpleasant reactions can be so great that some people avoid estate planning entirely and bury their heads in the sand, so to speak, without ever addressing necessary inheritance and estate-planning issues.

Blended Families Must Account for Old Family Ties and for New Family

Blended families are not restricted to a husband, wife, and children for their membership. Instead, the model of a blended family contains a "yours" element, a "mine" element, an "ours" element, and in many cases, the interests of former spouses and several pairs of grandparents, as well. Further, the ages of newlyweds and their children can sometimes differ vastly and significantly with blended families. These areas for age gaps and differences can and do impact estate planning in huge ways. The issues of retirement plans, life insurance, estate taxes, wills, and probate frequently arise in both federal and state court jurisprudence in these contexts.

It is normal and logical for a person to desire to bequeath his or her property, assets, and overall estate to his or her kids. However, people usually want to make provisions for their current spouses and possibly step-children, too. Children from prior relationships, as well as children from the current one and the current spouse, need to be taken into account and consideration for the decision-making. Many estate and financial planning professionals agree that having a perception of fairness to all kids involved in the inheritance process is key.

Blended Family Estate Planning Should Set Goals

With meticulous estate and financial planning, a blended family can accomplish its desired goals for inheritance. A primary aim is to nurture and provide for the current blended family during your lifetime, as well as to make provisions for them after your death. Preferably, effective blended family financial and estate plans should aim to achieve these basic goals, at a minimum:

  • disinherit the former spouse (remove him or her as joint owner with survivorship rights and as designated beneficiary of house, retirement, life insurance, and bank accounts)
  • provide protection for the testator's children
  • provide protection for the current spouse
  • reduce estate and inheritance tax liability to the greatest extent possible