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Avoid Strife When Estate Planning for Blended Families

Payton D. Cromwell
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For most married couples with no children from prior relationships, estate planning is a relatively uncomplicated process. This is particularly true if the marriage is long-standing, the couple has amassed most assets jointly, and the children of the marriage are adults and do not have the need for special needs or creditor protection planning.

By contrast, individuals who are in a second or third marriage who have children from prior relationships (and sometimes with the current spouse as well) can experience greater challenges that require more careful analysis and planning. These familial situations are often referred to as “blended families.” This article discusses several mutual goals of married couples who are planning for blended families and provides planning tips to ensure that a client’s goals are honored.

Goals

Perhaps the most important goal of married couples in blended families is to agree on the intended distribution of the estate following the death of the first spouse and upon the surviving spouse’s death. In most cases, each spouse will want to ensure the other spouse is taken care of for his or her lifetime and that the children from prior marriages (as well as of the current marriage) will receive some portion of their parent’s estate. While these goals may appear to be easily achievable, the discussion of money and property interest among spouses in a blended family situation can create a wide range of emotions.

An experienced estate planning attorney (such as the attorneys at Midgett Preti Olansen) knows the right questions to ask in an effort to gain a clear understanding of the family dynamics. For example, it is important to understand relational dynamics among spouses, their children from prior relationships, and their step-siblings because such relationships can change upon the death of a parent. Furthermore, you should anticipate the possibility of a contest of the estate plan following the first or second spouse’s death in order to effectively plan for the blended family.

Planning

Once the couple has identified their respective estate planning goals, it is then important to identify each asset comprising the couple’s estate and determine how much of the estate should be preserved for the surviving spouse for his or her lifetime and in what context. Consideration should be given to the following options:

  • An outright distribution of part or all of the estate to the surviving spouse and acknowledgment that the surviving spouse has no obligation to provide for the children of the prior relationship
  • Establishing a trust for the surviving spouse’s benefit for his or her lifetime with a distribution to the children upon the spouse’s death
  • Properly completing beneficiary designations for specific assets to provide for the spouse and separately for the children after consideration of income and estate tax consequences
  • Executing a pre- or post-marital agreement to bind the spouses

It is also important to consider the difference in ages of the spouses in a blended family. If there is a large age gap, there is the possibility that the children from the older spouse’s previous marriage will not receive an inheritance from their parent’s estate until the death of the much younger spouse — and that could be an unintended consequence of the planning.

Additionally, it is very important to coordinate the planning with the titling of the assets as between the couple and beneficiary designations that are in place. If these matters are not properly assessed, the planning can be derailed and result in unexpected consequences.

Estate Planning Documents for Blended Families

While it may be difficult to talk about initially, estate planning is a necessity when you become part of a blended family. Fortunately, there are several different estate planning methods available, and knowing how to divide an estate with your stepchildren will be important. Much will depend on your particular family situation, and if you are unsure where to begin, consult with a Virginia Beach estate planning attorney and learn more about the right estate planning documents for your family.

Retirement Accounts With Blended Familiesimage of coins stacked up on desk with percentage signs imposed over a line graph

It is essential to review all retirement accounts under your name and understand what can affect their distribution to beneficiaries. For example, retirement accounts, such as a pension or IRA, can be affected by a previous divorce. You will want to know how this previous marriage might affect your retirement accounts so you, your new spouse, and your children are not blindsided.

Life Insurance When Remarrying

Once you remarry, you will likely need to update the beneficiary designations on your life insurance policies since your situation has changed. You may also want to think about purchasing additional insurance to cover your new spouse and family. There is no limit to how many life insurance policies you can have, so consider everyone in your family and be specific about who the beneficiary will be for each policy.

Handling Medical Decisions For Blended Families

In the event that something happens to you and you can no longer make health decisions, you need to be prepared. Creating or updating your advance medical directives after a remarriage can be critical. Also, take the time to consider who you want to name as your power of attorney and discuss your wishes with them before anything happens to you.

Understanding Stepchildren’s Rights to Inheritance in Virginia

You will likely want to know what your stepchildren’s rights to inheritance in Virginia will be so that you can plan accordingly. If you have not legally adopted a stepchild, they will not have any right to inheritance unless you create a legal document stating otherwise.

If you were to die intestate, that is, without a legal will or other legal document, your estate would go to probate. It will then be up to the Commonwealth of Virginia to decide how to distribute your assets based on the legislated order of succession. Because a stepchild is not seen the same as an adopted or biological child under Virginia laws, they could be left with no inheritance if their stepparent dies intestate.

Importance of Choosing Your Executor 

One of the most crucial decisions you will need to make involves the selection of an executor and/or trustee. You want to choose somebody you can trust in this role since it is so important to your legal affairs. While you may consider naming your new spouse or one of your family members as your executor or trustee, seek the legal advice of a Virginia estate planning attorney to understand why this can be problematic, and what other options are available so that you can do to protect all those you love.

Preparing for a Feud

mother and daughter having conversation with a man with nice clothes at a desk.

Occasionally, regardless of the efforts expended by the couple to have a “perfect” estate plan in place for their blended family, litigation can ensue. One option to deflect a contest is to include a “no contest” clause in the estate plan. This concept is fairly simple – if a beneficiary contests the validity of a will or trust, he or she risks losing the very inheritance the parent intended for the beneficiary to receive.

While a no-contest clause is not always effective to forestall potential claims, it is a concept that should be considered. Additionally, couples should consider re-executing their estate plans from time to time to establish continuity of what they want to achieve. This can deter a potential litigant because he would have to contest multiple documents executed at various times that reiterate the couples’ goals. The best approach to estate planning for couples planning with blended families is to communicate with all intended beneficiaries as to what the goals and intentions are in the event of an incapacity or death. Communication while the couple is alive and competent can help reduce or eliminate surprises and negative emotions that can lead to estate contests.

The attorneys at Midgett Preti Olansen are experienced in planning for blended families. We provide guidance on how to balance competing interests while maintaining family harmony in order to provide you with peace of mind and a true sense of satisfaction in estate planning.

Know Where Your Assets Are Going

When it comes to your estate, making plans is the best way to protect your loved ones. By creating the right legal documents for your particular circumstances, such as a blended family, you will have peace of mind knowing where your assets are going.

Contact the professional attorneys with the law firm of Midgett Preti Olansen in Virginia Beach today for help with all your estate planning documents. We proudly serve residents throughout the Hampton Roads area, including Norfolk, Suffolk, Chesapeake, Hampton, Newport News, and the Eastern Shore. Schedule your appointment by calling 757-687-8888 or by way of our convenient online contact form.

Payton headshot

Written By Payton D. Cromwell

Ms. Cromwell focuses her practice on estate planning, estate and trust administration and guardianship/ conservatorship proceedings, and has over 27 years of practice in the specialties of estate planning and administration.

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