Estate Planning for Blended Families

A “blended family” can result when a person with one or more children marries or partners with a new spouse, either because the first marriage ended in divorce or the death of the former spouse. In many cases, a blended family consists of two parents who each have children from prior relationships. When they marry each other, they often blend their children together in the same household. They might even add to this blended family with additional children born to, or adopted by, them. If this definition makes your head spin with the number of possible combinations, try thinking of all of the possible estate planning issues that arise as the couple divides up the responsibilities of caring for each of them as they age, how they will finance that care as well as the care of their minor children and the financing of education for all of these children. Finally, how will the assets that are owned by each spouse as well as those they own jointly to be distributed once one of them and, finally, once both of them die?

Rather than allow these issues to paralyze the couple at the center of the family from doing the planning that is, quite frankly, their responsibility to each other and to their children, the couple could work toward a complete plan by tackling the issues one at a time. Here are some suggestions as to the issues the couple should address:

Fairness – Many couples ask for our advice as to how to be "fair" to the spouse while also being fair to the children from prior marriages or relationships. In traditional first (and final) marriages, couples often allow the surviving spouse a lot of control over how the children will inherit from the surviving spouse because the couple desires to provide as much flexibility to the surviving spouse as possible. In a blended family, the surviving spouse is not the parent of all of the children so giving that spouse carte blanche to determine who gets what and when can lead to a division of property that the first spouse to die would not have wanted.

Other Responsibilities. There may be legally-binding obligations that a spouse in a blended family owes to a former spouse or to children. This drain on the cash flow of the new family makes it challenging for many blended families to make ends meet and to provide a substantially similar standard of living for all of the children. Estate plans need to take into account the cash flow needs of all beneficiaries if one of the spouses is disabled (and, therefore, not bringing in an income) or deceased (and, therefore not bringing in an income). Adding an insurance component to the estate planning solution makes a lot of sense in these cases.

Choosing the Agents for Various Responsibilities. One of the difficult, yet essential issues is the identity of the agents that each party chooses in their various documents. One spouse may want to name the new spouse and a child from the previous marriage as Co-executor, Co-trustee or Co-agent under a financial or durable financial power of attorney. The other spouse or the children may object to sharing that control. This conflict can cause the couple to delay making plans (which is never a good strategy) or it can cause friction within the family during a time of crisis, such as when the senior family member has dementia, a medical emergency or dies.

An Unexpected Source of Friction. Often, there is a difference of opinion among the survivors as to the funeral arrangements when one of the spouses dies. Funeral arrangements can be charged with a lot of emotion and these issues can be avoided with a little planning on the part of the spouses at the center of the blended family. This is vitally important in blended family situations because, especially for spouses who are widowed and then remarry, the children may expect "Daddy" to be buried with their "Mommy" instead of with Daddy's current spouse. In some states, the executor named in the Will has the power to make funeral arrangements. In others, it is the closest living relative (such as the surviving spouse) and in others, it is an agent who must be named in a written document. Check with your attorney and with several funeral homes in your state to determine how they go about resolving conflicts among family members regarding funeral arrangements and how these conflicts can be avoided.

No Forms Exist. A plan for a blended family is not something that can be downloaded from an internet superstore. Unfortunately, the affairs of a blended family are more complex than that of a “one marriage until old age” family structure. There is no "one size fits all" in estate planning for a blended family. Just as the couple needs to be flexible, patient and tolerant in their daily lives when blending two families together, their estate plan is likely to require flexibility, patience, and compromise when planning their affairs because each blended family has custom needs. This means choosing your estate planning team with care and spending time, effort and money on a plan that works for your unique family.