There are all types of blended families. Generally, a blended family is defined as a family that is formed when adults join in a new relationship and both parties have children from previous relationships. My sister-in-law is an example of another type of blended family. She and her new husband both had children from previous marriages; in addition, her new husband was parenting his step-daughter who lived with him after her mom passed away. I have another friend who is raising her grandchild as her own. The trials and tribulations of these families have been celebrated in TV shows and movies such as Yours, Mine and Ours, Cheaper By The Dozen, Modern Family, The Brady Bunch, The Blind Spot and even Cinderella. Cinderella is a great example of the challenges that happen without estate planning. It may have ended happily ever after, but there were a lot of problems before “ever after.”
Family dynamics play a big role in estate planning for blended families. The parents choose the relationship and the children are affected. Whether the remarriage is when the children are young or adults living away from home, the child’s relationship with the new spouse and family is never exactly the same as in the family of origin. According to Pew Research Center, in 2013, 40 percent of unions included at least one previously married spouse and in 20 percent of remarriages, both spouses had previously said "I do."
What to do? How to maintain family harmony in the estate planning process:
1. Define goals. Expect that you and your spouse may have conflicting goals and expectations. Each of you should define your goals. Those conflicts can be discussed with your attorney and help shape the type of estate planning documents you have drafted. Be patient and respectful as you work things out.
2. Specify assets. Consider a Prenuptial Agreement prior to marriage to pre-define what is individual property/assets versus shared property/assets. Spelling things out in a legal document may strike some people as unloving; it isn’t about whether you love someone or have doubts about the marriage, rather it truly is proactively preventing problems.
3. Communicate. Regardless of the chosen method of communication, a well-thought-out estate plan will have a better chance of a seamless transition if you and your spouse have communicated. Communication is the secret weapon to ensuring a blended family maintains harmony, both before and after marriage.
4. Understand what happens if you do nothing. Your state has laws that determine how the money is distributed if you do nothing.
5. Name asset beneficiaries. Make sure that you have named primary and contingent beneficiaries for your investments and insurance. This can be done to evenly allocate resources outside the will or trust.
a. If you set your estate plan up so that the last spouse standing can change the beneficiaries, one set of children may lose out.
b. If your new spouse is considerably younger, the assets you leave behind may be used up or your children too old to benefit from their inheritance. This is where using beneficiary designations can allocate some resources to be distributed at your passing.
6. Decide who will be responsible. Name responsible individuals for making key decisions when you cannot. It is a good idea to choose someone who is level-headed and able to get along with other family members. There are no rules that say key people must be a family member or that all children need to be named in charge of things. Choose whomever is best for your plan even if that is an outside neutral entity such as a bank or trust company.
7. Plan for your partner. One way to provide for your spouse without leaving out your kids is to place some or all your money and property in a trust that your spouse can use during his or her lifetime. Then, when your spouse passes away, everything in the trust can go to your children.
8. Plan for disability as well as death. Most everyone experiences a disability prior to death that can be a drain on resources. Planning ahead with investments or long-term care insurance may help manage against those expenses. Know that a Prenuptial agreement may not protect assets designated as non-marital property from needing to be used for your spouse’s long-term care.
a. Documents used in case of disability or incapacity include a Health Care Directive, a Power of Attorney, and possibly a Revocable Living Trust.
b. Think through those you are designating to make decisions on your behalf and the powers you are giving them. Certain provisions may give others the power to change your estate plan entirely.
The best advice is simply to plan. Spouses can choose to have plans that mirror each other or separate plans that address their common and individual needs. The right mix depends on your goals, assets and communication. Your rb LEGAL attorney can help you through the process to draft the right documents to meet your individual and combined goals – for a happy ending for the entire family.