Family estate plans are changing because families are changing. While many estate plans remain focused on providing for a spouse and children after passing away, more and more address complex considerations because of a blended family.
What if you have one child of your own from a previous marriage, and two children with your spouse, while your spouse has 1 child from a previous marriage. How should you care not only for your own children from a previous marriage, but also for your spouse’s children from their previous marriage or relationship?
This kind of planning requires open and frank discussion between spouses, and sometimes the adult children as well, so they are prepared for and understand your wishes. It also requires you to think through some difficult scenarios to make sure your estate plan prepares well for several contingencies. If you pass away before your spouse, how can you be sure your surviving spouse will provide for your own children? If your spouse passes away before you, to what extent should you care for their children? Do you anticipate conflict between your children over your respective estates?
Below are a few common issues and strategies to address the complications of blended family estate planning. They all have certain advantages and disadvantages.
- To protect your children’s inheritance, establish a separate bank account, bonds, CDs, etc., in your name only, naming your children as payable on death beneficiaries. While your spouse will gain access to jointly held accounts when you pass away, any accounts in your own name will be passed directly to named beneficiaries. This may be appropriate particularly where you have inherited property from your family that you would not want to be passed on to your spouse’s children.
- In a similar vein, you may want to add your child’s name to the title of real estate you own in your name alone so that you own it jointly with them, “with a right of survivorship.”
- Consider using life insurance policies to ensure that your children or your spouse’s children, or both, receive an inheritance upon your death without depending on your surviving spouse to keep them in his or her Will.
- Deed your home to your spouse in a life estate, with the home going to your children when your spouse passes away. This will allow your spouse to remain in your home for as long as he or she lives, but ensures that it will remain on your side of the family, and cannot be sold without the consent and participation of your children.
- Enter into a binding contract with your spouse not to change each other’s wills after one of you passes away. This is a controversial approach that, if properly drafted, cements your and your spouse’s wills in place. This keeps your spouse from disinheriting your children after you pass away, but it also might keep them from making other important, even necessary, changes to their will. This extreme approach should be used only with great caution.
Please contact us today online or by calling 800.705.2121 to discuss your legal options.