Lions, Tigers, and Blended Families, Oh My!
Estate Planning for blended families can be difficult. Make sure your estate planning documents are not obsolete by talking to an estate planning attorney. Read the story of Jake and Chloe below on how blended families can affect your estate planning.
His—-hers—-ours! Blended families bring their own set of issues to estate planning. Like what, you ask? Well….
Let’s say Jake and Chloe get married and create a blended family. Jake has 2 kids from a prior marriage—Amanda and Samantha, 20 year old twins. Chloe has 2 kids from her prior marriage—Jimmy and Steve, ages 22 and 20.
After Jake and Chloe have been married for a couple of years, they have Zoey together. Amanda and Samantha have only met Jimmy and Steve a couple of times—at the wedding and at the rehearsal dinner. Christmases have not been spent as one big happy family. Now with the birth of Zoey, everyone is hanging out together much more.
When Zoey is a year old, Jake and Chloe go into a lawyer to get their estate planning done. The attorney recommends a Revocable Living Trust and Powers of Attorney. The attorney also tells Jake and Chloe that they are the poster children for estate plans that go awry—a blended family with a joint child. Here’s why.
1. Jake and Chloe, if like most parents, are very protective of their children. Each will want to make sure that what’s fair for one set of kids is fair for the other. This could require some detailed negotiation especially if:
a. Jake feels his girls are very responsible and Chloe feels his girls are spoiled brats.
b. Jake feels that Chloe’s kids weren’t raised to respect the value of a dollar and so restrictions should be put on their inheritance. Chloe heartily disagrees.
2. Jake and Chloe have 4 adult children and one very young child. They feel that more money should be allocated to Zoey, in the Revocable Living Trust, since she needs to be raised whereas the other 4 kids are all grown. They need to take into account how this inequitable split will impact the older 4 kids.
a. How upset will those 4 kids be? Upset enough to try to contest the Revocable Living Trust? Upset enough to choose never to have a relationship with Zoey? Upset enough to hold the decision against the stepparent—after all, the adult child’s parent would never have made this decision if he/she did not marry the stepparent?
3. What if Jake’s ex-wife comes from a very wealthy family and Amanda and Samantha will inherit a considerable fortune when their grandparents and mother pass away. Should this impact how much money Amanda and Samantha get from Jake and Chloe? Maybe, but again there should be a strong emphasis on the impact that will have on the family dynamic.
4. There are many blended families that seem to get along very well until a spouse dies. Let’s say Chloe dies first. It may have seemed that Jake got along well with Jimmy and Steve. Once Chloe is gone, Jimmy and Steve demonstrate their intense dislike for Jake. This scenario is much more common than you would think.
5. Not only do Jake and Chloe have to decide how to divide money between all of the children, but they have to decide how they are going to divide assets between themselves. All of this information needs to be put into a Revocable Living Trust.
a. Many people in Jake and Chloe’s situation, who have been married and divorced before, keep all finances separate. If Jake dies first, is he leaving all of his assets to Chloe? Is Chloe leaving all to Jake? OR are some of Jake’s assets going immediately to Amanda and Samantha when he dies OR are some of Chloe’s assets going immediately to Jimmy and Steve when she dies?
I typically find that if Jake and Chloe have been married for 10+ years, Jake and Chloe will leave all of their assets to each other. This is not necessarily the case if they have been married less than 10 years.
All of these issues are present in some form or fashion in many families. However, the dynamic of a blended family makes these estate planning issues potentially more painful and divisive. What do you do?
You make sure you have all of your estate planning documents in order and COMMUNICATE! COMMUNICATE! COMMUNICATE!
Get in contact with me today to make sure your estate planning affairs are in order.
Where There’s A Will, There’s A Way