Yours, Mine, Ours: Estate Planning For Blended Families
As it is, estate planning is a complicated process for many individuals. Many underestimate the emotional weight and financial nuances of such preparations, whether they are working with an attorney or going the DIY route (which we never recommend.)
When you live in a blended family, these problems are only magnified. It is no longer sufficient to leave all of your assets to a surviving spouse and hope for the best, especially if there is a risk that this may negatively impact your children or family members in the long term.
All in all, the complexities of blended families produce a lot to worry about, making working with an estate planner necessary. To read about where to start your journey and the top considerations estate planning attorneys recommend, read below.
What Belongs to Who: Assets
When individuals marry young, most assets they own are earned together. In cases like this, it would make sense to split everything 50/50 and call it a day. In second marriages, or those that happen later in life, assets become far more complicated.
In blended families, there is yours, mine, and ours. These concepts separate personal pre-marriage assets of each party from the ones accumulated together as a couple. Often, individuals will want their personal assets to stay within their family of origin, while joint assets can be split evenly amongst stepchildren and other family members.
While this is not always the case, it’s more common than many realize, especially when it comes to leaving a large inheritance, wealth gaps between parties, or transferring the ownership and profit of a family business.
Asset Splitting and Children from Previous Marriages
Run of the mill estate planning and state intestate laws are unprepared for the unique situation created by blended families.. As such, for those on second or even third marriages, you and an attorney must consider several other estate planning strategies to ensure your surviving spouse, and biological children are all appropriately protected.
Let’s look at an example.
During a second marriage, both spouses bring children into a blended family. After one spouse passes away, their biological child eventually becomes estranged from their step-parent.
This creates a conflict.
Without making special arrangements, the surviving spouse would get all of the remaining assets of their deceased spouse’s estate. The estranged child would then likely be left out of the will, losing what is fairly their portion of their biological parent’s estate.
Unfortunately, a large number of blended families run into this problem when one spouse dies. This is why special care is needed to place assets in a trust or other estate planning document, rather than relying on a standard will alone.
Caring for Minors and Dependents
Even though many individuals believe that estate planning is for the elderly, it’s not. In fact, building an estate plan early and updating it regularly is one of the best forms of financial insurance should something unexpected happen. Warding off against the unexpected is particularly important when minor children, dependent adult children, or even dependent elders are involved in your life.
For those with dependents, ensuring they get the right level of care (and money to fund it) if you pass away is integral to their safety and quality of life. Many documents can help with these concerns, particularly trusts and special needs trusts. Through a trust, you can ensure that assets are put away for your family members and disbursed by the trustee as you intended.
Trusts and Trustees— Choose Wisely
Put in simple terms, a trust is like a basket full of supplies you set aside for another time. You put this basket together with some instructions on how to use the contents and then leave someone in charge of doing just that after you pass away. That person is known as the trustee.
As you can see, the trustee has quite a bit of power in these situations, so choosing wisely is essential.
Arizona Estate Planning Attorney
Sue is an Arizona Estate Planning Attorney with over 30 years of experience. She spent the first 11 years of her practice representing families involved with the Department of Child Safety and then she transitioned into helping families with estate planning for the past 20 plus years.
Through this work, Sue has helped countless individuals, especially those in the special needs community through crafting special needs trusts and obtaining guardianships for disabled individuals approaching the age of 18.