About four out of every ten families are blended families, according to recent statistics.
Estate planning for blended families can be complex, both in terms of the logistics surrounding financial and tax planning and the emotional aspects of those decisions. Here are tips to consider if your family is a blended family:
First, it is important to have a Will and to keep this Will updated. Depending on what state you live in, you might face unique challenges (in some states, for example, a stepchild who has not been legally adopted by you is not considered to be your child for purposes of intestate succession).
An “I love you Will” – where both spouses leave everything outright to the surviving spouse – may work well for the first marriage but should be revisited in a blended family situation. Here is a common scenario where this type of Will could have unintended consequences: A man has a child from a previous marriage and marries a woman who has three children. The man dies and leaves everything to his wife. His wife lives for a few more decades, and she loses touch with her husband’s child during this time. This wife later signs a new Will and leaves all of her assets to her children, and in doing so, leaves the husband’s child disinherited.
To ensure that children in blended families are treated fairly, trusts are often utilized. You can opt to leave assets in a trust that will support your spouse during their life after you have passed. Following your spouse’s death, the trust controls who receives the rest of these assets, so you can ensure that assets are passed on to your children. If your spouse decides to remarry, this can also protect your assets from going to a new spouse and their children. If a trust is used, it is important to carefully consider who you wish to be the trustee.
You’ll want to consider other factors as well, such as your spouse’s age. If you leave your assets in a trust for a spouse who is significantly younger than you, keep in mind that your children would not receive any benefit until after your spouse’s death. You might want to direct a portion of your assets to your children at your death instead. Also, if you plan to leave your entire estate only to your children, an agreement clearly waiving spousal rights is recommended.
Determining and clearly communicating your goals with your spouse is key when it comes to estate planning with a blended family. Although people usually have good intentions, it takes careful planning to ensure your intentions are met and to avoid inadvertent conflict.
For help creating or updating your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.