The most common marital status today is neither “married,” “single” nor “divorced”; it is “remarried.” With so many re-marriages, there is a higher incidence of estate planning for blended families – that is, a family where at least one spouse has a child, or children, from a previous relationship.
Estate planning for blended families can present unique challenges. The interests of a current spouse, and any children of the current marriage, may conflict with the desire to provide for children of a previous marriage.
Children of a prior marriage can be an integral and loving part of the new family relationship and treated by both spouses as though all children are their own. However, there might be strains between the previous family and a new spouse.
If all assets are left to the new spouse, the prior children might not be provided for as a deceased spouse would have wished, since there might be no legal obligation for the surviving spouse to leave assets to the deceased spouse’s children.
On the other hand, if assets are left for prior children at the death of their parent, there might not be sufficient assets remaining to provide for the current spouse.
Enforcing oral promises exchanged can be problematic, and chances that such promises will be enforced by a judge are minimal. Even with harmonious blended families, lack of planning can lead to unforeseen difficulties.
Intestacy laws were created when the traditional family was the norm. State law rarely addresses the needs of blended families. At a minimum, each spouse should have a will that addresses the issues.
One type of an estate planning tool that provides for surviving spouses, and still protects a portion of the assets for the children of a prior marriage is the Qualified Terminable Interest Property Trust, or QTIP Trust. Such a trust can provide estate tax protection, generate income for the surviving spouse during his/her lifetime, and make the principal available under conditions set forth in the document.
At the death of the surviving spouse, those assets could then be distributed among the mutual and/or prior children pursuant to the wishes of the previously deceased spouse.
There are other estate planning tools blended families can use. A spouse with a much younger spouse can create benefits for the children from the prior marriage by purchasing life insurance. In such a case, the children receive cash benefits immediately upon the client’s death rather than requiring the children to wait many years until the death of their stepparent.
Other techniques are also available to balance benefits passing to a new spouse with benefits for the children of a previous marriage. Mutual life estates can assure that each spouse will have the right to remain in the marital household while assuring that each spouse’s share will then pass to identified heirs.
With careful consideration, estate planning for the blended family can provide orderly, equitable and compassionate distribution of estate assets, while also minimizing or eliminating animosity between the surviving beneficiaries.
Consult with a qualified estate planning attorney to design an estate plan that addresses these types of issues.
Brian T. Treacy is an elder law and estate planning attorney, and owner of Elder Law & Estate Planning Center in Bluffton. hiltonheadelderlaw.com