6 Estate Planning Tips For Blended Families
By: Christine Fletcher - May 17, 2019
Remember the Brady Bunch television show that extolled the joys and challenges of blended families? Mike and Carol Brady were the iconic blended family, each bringing 3 children into the marriage and raising them as one big happy family. I wonder what their estate planning looked like. Did Mike leave everything to Carol outright on his death, knowing that she would treat all 6 children equally and not favor her 3 girls over his 3 boys?
We like to think that Carol would “do the right thing,” but what if she didn’t? What if she never liked Mike’s boys and decided to leave everything to Marcia, Jan and Cindy? That fun 60s style home and the fruits of Mike’s architectural career would pass only to her children, while omitting Mike’s biological children. It happens a lot. The surviving spouse disinherits her stepchildren. Sometimes it is intentional and deceptive from the start. Carol never really liked those boys. Any affection for them was an act, put on for Mike’s benefit. She always knew she would cut them out if given the opportunity.
In other circumstances, it happens slowly over time. As the years pass after Mike’s death, Carol and the boys grow apart. When it comes time to update her estate plan, she just omits them. She hasn’t seen them much anyway. They stopped sending her Mother’s Day cards years ago. There are no bad feelings or ill will. It just happens.
Apart from the day-to-day challenges, blended families like the fictional Brady’s face additional hurdles when addressing their estate planning. It is estimated that more than half of U.S. families are remarried or re-coupled. If you are in this category and raising a blended family, here are six pointers for protecting your family and your assets.
- A simple will probably won't cut it. It opens the possibility that your biological children could be cut out of your spouse’s estate down the road. If you want to create an “I love you” will leaving everything to your spouse, be aware that after you are gone, he could cut out your children and leave all your assets to his children, a new spouse or anyone he wants. He has no obligation to your children.
- Consider a trust that leaves assets to your spouse for her lifetime, with the balance passing to your children on her death. This ensures that your spouse has access to the funds during her lifetime and that the assets rightly go to your children when she is gone.
- Choose a sophisticated and experienced trustee. Who will make the financial decisions about investing the assets and distributing them to your spouse after you are gone? There could be tension between what your spouse wants and what your kids want to give him. Who will act as the referee between them?
- Plan for the possibility that your surviving spouse will remarry. A trust can ensure that the assets are protected in the event your spouse remarries.
- Consider leaving some assets to your biological children on your death. That way, they will not be sitting around waiting for their stepmother or stepfather to kick the proverbial bucket.
- Decide who will make health care decisions. This is a big question. Most states only allow you to name one person to make health care decisions. Will that be your surviving spouse or your son or daughter? This can lead to a lot of fighting between them. It is not uncommon for stepparents to cut off access and information to their spouse’s children when the spouse has been hospitalized. The reverse happens as well. Will your children prevent your spouse from visiting you? Give this topic a lot of consideration.
Many clients like to think of their families as a modern version of the Brady Bunch. But when you are gone and time has passed, will your spouse still treat your children as her own? Let’s hope she does, but plan for the fact that it rarely turns out that way.
Article Source: Forbes.com
** Disclaimer Required by IRS Circular 230** Unless otherwise expressly approved in advance by the undersigned, any discussion of federal tax matters herein is not intended and cannot be used 1) to avoid penalties under the Federal tax laws, or 2) to promote, market or recommend to another party any transaction or tax-related matter addressed.