Keep the Love Alive: Estate Planning for Blended Families
Did you know that a Pew Research Center study reported that 40% of new marriages in the US are remarriages for one or both partners? It is also estimated that most Americans either have been or will be in a blended family during their lifetime, either as a step-parent or a step-child. Blended families are becoming the new norm. This family structure can take all forms. Sometimes the couple may marry when they each have young children living at home, and sometimes they may marry later in life when all their children are adults. At times, each partner may come into the marriage with significant separate assets, and other times only one partner or neither partner will have their own assets. Whatever the case may be, blended families require a well drafted estate plan to protect themselves.
Want your stuff to go to the right people? You must have a will. One of the main misconceptions I hear from clients is that they don’t think they need a will because everything is going to go to their spouse when they die anyway. The truth is, for blended families that is almost never the case. If you don’t have a will, then the Texas laws of intestacy determine where your property goes, and you may not like the outcome. The laws are meant to leave everyone a piece of the pie, but they do a very poor job, and have no consideration for your individual factors. If you want to protect your spouse or your children, you must have a will.
Want to make sure your spouse is taken care of, but your kids are to? You must have a will, and you might consider a trust. Couples often execute “sweetheart wills” that leave their estate to the other spouse in the event of one spouse’s death. The surviving spouse may change their will after the death of the first spouse. That can become problematic. Consider this scenario: Bill and Sally execute sweetheart wills, Sally dies, Bill remarries and executes a new sweetheart will with his new wife, Jane, then Bill dies. Jane now inherits the entire estate, including what Sally left Bill. Now consider that same scenario with Bill, Sally, and Jane each having separate children. Issues will arise.
What can you do to prevent this situation? Bill and Sally could utilize a trust to prevent this outcome. By using a trust, Bill or Sally could limit the surviving spouse’s ability to give away all of the deceased spouse’s assets, while still allowing the surviving spouse access in the event of a health or other crisis. This plan not only protects the deceased spouse and the deceased spouse’s children, but it also protects the surviving spouse from creditors and predators.
Want to make sure your spouse, or your children, or maybe both, have a say in helping make decisions for you if you are incapacitated? You need a power of attorney. By executing a power of attorney, you are controlling who will have the authority to act on your behalf, and when they will have the authority to do so. Failure to put a power of attorney in place risks leaving that decision up to someone else, and you may not like the result.
If you are part of a blended family the most important thing you can do is sit down, make a plan, and communicate that plan to those you love. Blended families can bring together two wonderful, loving families into one, but they can also create rifts and disagreements. Letting your loved ones know what you want helps keep the love alive.