by Bhavik Patel and Erin Waldron
When I started my practice as a wealth planning attorney, I would say about two out of ten families I met with for estate planning or administration purposes were what we call “blended families” – families where at least one person brought children from a prior marriage. Now that number is around four out of ten.
And inevitably, we meet with the family, and they proclaim to be (and maybe are) a smaller version of the Brady Bunch. What a person can never plan for, however, is what the emotional loss of one’s parent will do to the family as a whole and as individuals, and how they will be able to go on without Mike or Carol Brady.As estate planners, we have to delicately get our “splendid blendeds” to consider multiple possible (but unlikely) scenarios based on how they want their estate to transition:
Brady Bunch Option 1: Everything to the Surviving Spouse. Many families choose this option because they are confident that the surviving spouse will take care of all the children equally. But what if not all of the children you leave are also children of your now widowed spouse? Are you confident that she will treat both her own children and your children equally? The surviving spouse has no legal obligation to support or leave an inheritance to your kids. What if your surviving spouse remarries and leaves everything to her new spouse? With proper planning through a Qualified Terminable Interest Property (QTIP) Marital Trust, these concerns can all be accounted for and alleviated.
Brady Bunch Option 2: Everything to the kids. If you can be sure that your surviving spouse will have enough assets to continue to live comfortably, then this may alleviate many of the concerns above. It will not guarantee, however, that your spouse does not choose to exercise her elective share rights. Many states now offer a spouse elective share rights to ensure that a spouse is not entirely disinherited. The elective share amount is calculated by statute and paid to the surviving spouse out of the assets left to your kids. If you still prefer this option, however, you can deal with this right in a pre- or post-nuptial agreement.
Brady Bunch Option 3: Split everything between your old family and your new family. This option allows you to think of the needs of your children from a prior marriage and the needs of your current spouse and children with him or her, and allocate assets based upon need. Now this may mean that everyone is not treated equally which is a goal of many parents, but it still may be the safest option to ensure everyone is provided for.
Regardless of how you decide to plan for your blended family though, do yourself and your family members a favor and plan. Nothing drives families apart like no planning and the mess it leaves behind. For more information on planning for your blended or unblended family, visit www.WealthPlanningBlog.com.
Bhavik Patel is the co-Chair and Erin Waldron is a member of the Sandberg Phoenix Wealth Planning Team, which provides assistance to small businesses and individuals in building and protecting their assets. Contact Bhavik or Erin at 314-231-3332 or visit SandbergPhoenix.com
Submitted 9 years 138 days ago