Family circumstances are often what motivate people to establish or update estate plans. First-time parents often decide they need to create or modify an estate plan. Divorce is another reason that people think about how they may be vulnerable and what legacy they may leave when they die.
Starting a blended family can also be a powerful motivator to create or update an estate plan. Blended families involved parents with children from prior relationships marrying and creating a new family unit. Blended families have several unique legal issues that estate planning can help address. The following are some of the estate planning moves those starting blended families may benefit from making.
Providing for a spouse, children and stepchildren
Depending on the age of the family, the value of household resources, available life insurance coverage and other factors, parents may want to leave resources for their spouse and their children or possibly even their stepchildren. Sometimes, both parents in a blended family agree to preserve certain assets as separate property so that their children inherit those resources.
Other times, parents in a blended family comingle everything and agree to treat their stepchildren like their legal or biological children for the purpose of inheritance. Especially in cases where people want their stepchildren to inherit, drafting a thorough estate plan is of the utmost importance. Otherwise, stepchildren typically do not have the right to inherit from an estate when a stepparent dies.
Discussing plans ahead of time
Spouses may also need to talk at length about how they intend to protect each other, as children often have strong inheritance rights. Conflicts between stepparents and stepchildren when a parent dies in a blended family are relatively common. Families may choose to establish more robust documents, such as trusts, to diminish the likelihood of probate litigation and other complications.
Communication can be one of the most crucial components of an effective estate plan for a blended family. Children, stepchildren and spouses need to know what to expect. Unfounded and unrealistic expectations from an estate often give rise to conflict. Disputes about an inheritance can waste estate resources.
The estate may pay tens of thousands of dollars to cover litigation costs when families fight. Disputes can therefore diminish what everyone inherits. Additionally, conflict related to an estate in a blended family may result in permanent damage to the relationships between step-siblings. In some cases, stepchildren may become permanently estranged from stepparents over inheritance disputes.
Having open discussions and creating thorough estate planning documents can help ensure that a family remains a cohesive unit even if one of the parents dies prematurely. Those starting blended families often need to act promptly to protect their legacy and the family that they have created.
