Regardless of how much planning and communication is involved, creating an estate plan for a blended family can be complicated. Blended families come in many shapes and sizes, making it hard to make sure everyone gets what they need.
No matter your family unit’s makeup, you can take steps to create an airtight estate plan that benefits everyone.
In this article, we explore the challenges of creating an effective estate plan that considers all stakeholders and works toward fair outcomes.
What Is a Blended Family?
A blended family is composed of parents and children from previous relationships. Often, a blended family also includes children the parents have together. The Brady Bunch, for example, is a blended family.
In our modern times, blended families are also taking on new definitions. Same-sex couples may have children from outside donors, and those donors may act as third parents. Some polyamorous families have a wide net of parent and child relationships, as the adults in these relationships have multiple partners.
The Challenges Blended Families Face in Estate Planning
One of the most pressing issues is defining family roles and responsibilities. For example, they must decide who will make financial or healthcare decisions for elderly family members. It may also be difficult to determine who will be the guardian of minor children.
Blended families must often combine complex assets with diverse values. Such assets can include real estate, investments, and personal belongings.
In all situations, you must prioritize the children’s needs, regardless of biological status. Parents must create a clear plan that fairly distributes assets among children and stepchildren.
Fair tax strategies also play a critical role in your estate plan. They help ensure each family member receives equitable treatment, and asset distribution benefits everyone involved.
You must also account for possible changes in the family structure over time. The plan must be easily adaptable when necessary.
Identifying Goals and Objectives
When creating an estate plan for your blended family, you must specify the goals and objectives that meet your needs.
For instance, you want to make sure you provide for both your biological children and stepchildren.
You must also work to minimize conflict, ensuring that everyone involved feels respected and heard.
Doing so involves:
- setting clear expectations
- allowing your family members to openly communicate
- ensuring your estate plan reflects your values and priorities
It can be difficult to incorporate all these aspects, especially when they conflict with one another. Make sure to work closely with a skilled attorney to create a plan that helps keep everyone happy.
Considering the Assets Involved
When estate planning, blended families must prepare various assets each family member owns. The myriad possessions that make up such estates can be extensive.
It will help if you consider each asset individually. Think about just that asset, and distribute it according to your family’s needs.
Next, think about potential conflicts that could arise. Work on strategies that make distribution equitable for your beneficiaries. For example, one person gets the home, and the other receives a larger portion of smaller assets, such as the car, jewelry, and so on.
Managing assets for your blended family is not always a straightforward process. With the proper guidance and planning, however, your estate plan can account for all property and provide peace of mind for your loved ones.
Utilizing a Trust
Trusts can be a powerful tool in your blended family’s estate plan. A trust is a legal entity that holds a person's assets. You elect someone to manage these assets, called a “trustee.” This person distributes the assets to beneficiaries. You can also give them the power to make investments and change distribution terms when necessary.
A trust can help ensure a smooth asset transfer, minimize estate taxes, and allow for specific instructions on asset distribution.
Let’s look at how a trust can benefit your blended family. Perhaps you have children from a previous relationship, and you want to care for them alongside your current spouse and the children you have together. By creating a trust, you can specify exactly how you want to divide your assets. Instead of giving everyone their portion in a lump sum, you can develop allowances and caveats.
Trusts also allow you to avoid probate. Probate is the court proceeding that distributes assets according to a will. The process can be lengthy and expensive, leaving your beneficiaries with less than they deserve. A trust keeps your estate active, operating as a living entity. When your heirs get their portion, the trust simply signs ownership over to them.
Furthermore, a trust can continue to grow your estate. Your trustee can make investments, sell property, and take other actions that will benefit your family later.
Establishing Guardianship for Minor Children
As a blended family, it is important to consider your children’s future when estate planning. Establishing guardianship ensures that the kids will be cared for by those you trust most. Otherwise, the state can make these decisions for you, leaving your kids with people you don’t want or, even worse, strangers.
A good estate plan helps you select a guardian who shares your values. You need someone who can provide a stable, caring environment.
Such selection may present a challenge to blended families. Some people put a high value on blood relations over chosen family, and they may not be interested in caring for children outside their bloodline. It’s important to have frank, transparent conversations with all guardian candidates. You must make sure they are willing and able to care for all kids equally.
When a blended family creates its estate plan, several conflicts can arise.
People are particularly sensitive to the unequal treatment of children. If it looks like biological kids are favored, for instance, resentment and disputes can occur after your passing.
The presence of former spouses can create conflict as well. They may have legal claims to specific assets, complicating matters. Even without such legal claims, living co-parents may believe they deserve a greater portion of your assets, and they can attempt legal action against your estate plan.
A good estate planning lawyer can help you recognize these potential conflicts, and they can offer strategies to help you stop them from becoming a problem. Remember, planning isn’t just about what you want, it’s also about foreseeing roadblocks and navigating around them. An experienced attorney can help you create a strategy that keeps everyone happy while also fulfilling your wishes.
The Law Office of David A. Martin & Associates is here to help you create a solid estate plan, and we can work with your unique family circumstances. To schedule time with our team, contact us online or call us directly at (916) 299-3936.