ESTATE PLANNING FOR BLENDED FAMILIES: SECOND OR LATER MARRIAGES AND DIVORCE OF BENEFICIARIES
January 27, 2017
By Cory Howes
We know that family structure has dramatically changed over time and that there’s an astonishing variety of family structures today. You’ll see everything ranging from the “traditional” nuclear family to blended families of step-siblings and half-siblings headed by parents in a second or later marriage.
Most of us want to take care of our spouse, our children, and maybe the rest of our family, too. However, letting everyone else work out the details after you are gone or incapacitated often means chaos, and, sadly, the risk of your family being torn apart. It’s not just your immediate marriage that you should be concerned about – the marriages of every beneficiary named in your plan can affect your estate planning.
Proper estate planning can alleviate your concerns about your unique family situation, giving you the confidence and peace of mind that your wishes will be carried out. Since not all families are alike, you can’t rely on an off-the-shelf estate plan or make assumptions based on other families’ experiences. Working with an experienced estate planning attorney can help you understand your obstacles, as well as opportunities, available to you and your family.
You need to have honest conversations with your spouse about your goals for the future, your existing finances, and how you would like your assets to be distributed. These conversations have the potential to be emotionally-charged and difficult – for instance, what if your husband’s oldest son can’t manage his finances, but he is in denial and he refuses to talk about his son’s past business mistakes? You need to air your concerns in a safe context. Sweeping problems under the rug will all but guarantee hurt feelings and negative financial ramifications later.
One big concern will likely be to make sure that each spouse’s portion of the estate goes to each desired beneficiary. In other words, if you have a child from a previous relationship, that child’s inheritance needs to be protected even if the child’s parent is the first spouse to pass away. For example, after the first spouse dies, what if the surviving spouse amends the documents to remove whomever he or she wants from the inheritance, including the deceased spouse’s children? Your children need fairness, as do your spouse’s children.
Get creative when planning, and seek guidance from professionals who have worked with families like yours in the past. Be open to different solutions; likewise, think about contingencies and ask “What if?” a lot. By examining all your fears and similarly exploring possible solutions, you will be more likely to find a better plan that will give you more peace of mind.
Finally, recognize that estate planning is an ongoing process, not a legal transaction. The plans you make today likely need to be revised and amended as the years pass. For instance, over the next decade, your wife’s oldest daughter might start a business, marry and have two children. Your plan should then be updated to reflect her new financial reality and challenges.
If you have a blended family and would like to discuss your estate planning needs, we are here to help. Please do not hesitate to contact us if you have questions or for a complimentary consultation.