The spectrum of planning for blended families is different than planning for a husband and wife who have only been married to each other. When a parent passes away in a blended family, the children from all parental combinations will likely be extremely interested in the will and asset distribution—a situation that almost always causes tension between surviving family members.
For example, a common concern from the children of a first marriage is that mom or dad will die, leave everything to their current spouse, and, after that spouse dies, everything will go to the children of the current marriage, thus cutting out the children from the first marriage.
Planning the estate of a person in a blended family can be extremely complicated.
There is more than just money and assets involved.
With more than one family in the picture, continuity planning can make the difference between leaving survivors on good speaking terms or estranged.
Planning in this situation can be emotionally delicate and requires great strength of character to accomplish satisfactorily.
In the realm of estate and will planning in a blended family, it’s important that all survivors know that it was the deceased who created the ongoing situation and not one of the estate beneficiaries.
Preventatively, we recommend that anyone in a blended family prepare a letter to survivors (perhaps even individual letters), describing the intentions behind the plan.
Considerations for estate planning in blended families:
The pre-nup: If a pre-nup was written, it will be an over-riding factor in the potential planning of an estate in a blended family.
- Caretaker of the surviving spouse: The planner must consider who will be the caretaker of the surviving spouse, if needed. This is true in all family situations, but if there are children from different marriages, it has the potential to be a family sticking point. Also, the planner should contemplate and outline if the caretaker should be paid for performing that service.
- Whether to divide or sell assets: The comprehensive planner must clearly define who uses or “gets” what assets, if there are shared assets. One strategy would be the planner directing the executor to sell everything and split it between the surviving spouse and all children. However, if a child has a particular attachment to an asset—for example, a summer cabin—perhaps things don’t need to be sold. There might be another way of sharing by using other financial assets to create financial equality.
- Tax considerations: The amount of tax payable by an estate depends on whether assets are left to a spouse (tax-free) or to children (taxable). Often, the estate plan of a blended family includes bequests to the next generation of either the first or subsequent marriages. But if those assets are taxed in the estate of the deceased, who pays the tax? The surviving spouse? The beneficiary of the taxable asset? All beneficiaries?
There are many other questions to consider for an state planner who is part of a blended family. Estate planning always requires care, but in this case, it requires extra care.
We can help. Contact us today to talk about your blended family estate planning needs.