A blended family involves two parents who have children from previous marriages, and who are starting a new family together. Blended families are similar to any other family unit but do have some unique concerns that parents need to address.
Estate planning can be particularly important for those in complex family circumstances. A parent in a newly-established blended family may need to consider the five issues below when creating or updating an estate plan.
Their stepchildren
Typically, stepchildren do not have an automatic right to inherit from a stepparent’s estate. Instead, inheritance rights primarily protect the spouse and biological children of the person who dies. Especially if stepchildren have special needs, a stepparent may need to create a plan that addresses their needs should anything happen to them.
The family dynamic
More thorough estate plans are often necessary when people believe their loved ones may fight over their property. If someone remarries after a divorce or has an age gap with their new spouse, that can lead to tension with their children. The likelihood of children and stepparents fighting after someone dies or in the event of a medical emergency can make more thorough estate planning a top priority for parents with blended families.
Ex-spouses
People tend to leave resources for their spouses in their estate plans. In fact, they frequently put their spouses in positions of authority by granting them power of attorney or trustee. An estate plan may require revisions to remove an ex-spouse as a beneficiary and to eliminate any authority they might hold during estate administration. The person remarrying may also need to address any ongoing financial obligations they have to their ex-spouse in the estate plan.
Tax planning
Taxes can be an important consideration in any estate plan. In scenarios where people want to leave assets for their stepchildren, estate taxes and other types of taxes, like capital gains taxes, can be an important consideration. The nature of the assets and the type of relationship influence the tax risks someone needs to address.
Advance communication
Few things set families up for disappointment and disputes more effectively than a failure to communicate about an estate plan. Someone starting a blended family needs to ensure that their spouse and their children understand their legacy wishes. They may also need to talk about who makes their medical decisions in an emergency and what their preferences might be. Ensuring that loved ones know what to expect and who has legal authority in challenging situations can help prevent conflicts that could tear the blended family apart.
Creating a new estate plan and discussing intentions with family members can be beneficial for everyone in a new blended family. Proper estate planning preparation can reduce the risk of conflict and maximize the protections available for vulnerable family members.
