A brief look at statistics reveals that family structure has dramatically changed over time and that there’s an astonishing variety of family structures out there. Everything ranging from the “traditional” nuclear family to blended families of step-siblings and half-siblings headed by parents in a second or later marriage. We continue our discussion from last month on blended families.
Arguably the most famous blended family in recent years was the Kardashian-Jenner clan. Bruce/Caitlyn Jenner had 4 children when he married Kris Kardashian who also had 4 children. They then had 2 children together. It’s not a secret that at least some of Bruce’s children did not get along with some of Kris’ children. I think one thing is very likely, Bruce/Caitlyn and Kris did some planning to ensure their children from previous relationships would inherit from their respective parent. While, you may not have family dynamics that are not quite so dramatic as the Kardashian-Jenner clan, any blended family situation has some issues that need to be addressed.
But I don’t want to talk about it: Assessing Your Family’s Needs and Challenges
First things, first. You need to have honest conversations with your spouse about your goals for the future, your existing finances and how you would like your assets to be distributed. While these conversations have the potential to be emotionally-charged and difficult – for instance, what if your husband’s oldest son can’t manage his finances, but he is in denial and he refuses to talk about his son’s past business mistakes? You need to air your concerns in a safe context. Sweeping problems under the rug will all but guarantee hurt feelings and negative financial ramifications later.
One big concern will likely be to make sure that each spouse’s portion of the estate goes to each desired beneficiary. In other words, if you have a child from a previous relationship, that child’s inheritance needs to be protected especially if the child’s parent is the first spouse to pass away. For instance: after the first spouse dies, what if the surviving spouse amends the documents to remove whomever he or she wants from the inheritance, including the deceased spouse’s children? Your children need fairness, as do your spouse’s children.
Creativity Isn’t Just for Artists
Get creative when planning. Seek guidance from professionals who you trust can help you address the issues presented by your family dynamics. Be open to different solutions; likewise, think about contingencies and ask “What If?” a lot. By examining all your fears and similarly exploring possible solutions, you will be more likely to find a better plan that will give you more peace of mind.
Finally, recognize that estate planning is a fluid process. The plans you make today (or within the next three months, let’s say) will likely need to be revised and amended as the years pass. For instance, over the next decade, your wife’s oldest daughter might start a business, marry and have two children: your plan should then be updated to reflect her new financial reality and challenges. One or both you may experience a significant health crisis and now must consider planning options you had not previously thought you needed to consider.
Tactical Planning Tools and Solutions
Do you have a significant amount of wealth in your retirement accounts and life insurance policies? The beneficiary designation controls these assets, not your trust or will, so these designations need to be coordinated with your overall estate planning.
Think about your estate planning as a whole as well as these separate accounts. For instance, you may wish to allow your estate to pass to your children while providing a death benefit through a life insurance plan for your surviving spouse. However, do not name minors as beneficiaries, since they are not legally able to control assets. If you do, the court may appoint a guardian to manage the asset until the child turns 18. We can discuss strategies that will allow your spouse or children to receive benefits from your retirement account and life insurance policies without court intervention.
Advanced Health Care Directive
A health care directive gives you the opportunity to name a trusted family member to make decisions about your health care, should you not be able to voice your opinion. Keeping your health care directive up-to-date is always helpful for your physicians and other medical professionals in the event of an emergency. This is also a chance to discuss your feelings about burial arrangements, organ donation, and end-of-life care with your new spouse.
Power of Attorney for Financial Affairs
Similar to a health care directive, a power of attorney gives you the opportunity to name a trusted family member to manage your legal decisions and financial affairs should you not be able to do so. If you have already named a power of attorney, including a previous spouse, make sure that you revoke him or her before naming your children, new spouse or another trusted individual as your agent. It is also a good idea to keep your power of attorney “fresh” by renewing it every so often since powers of attorney that are older than a few years might not be accepted by a bank or third party when needed despite recent changes in Texas law aimed at making it more difficult for financial institutions to refuse to accept it.
Last month we discussed in more detail the use of trusts in blended family situations. As a reminder, Trusts are probably the most flexible estate planning tool out there. If you haven’t had yours looked at in the last four years, it’s probably worth a review. If it’s been longer than 10 years, it almost certainly needs a complete overhaul, because there have been so many changes in laws over the last decade.
It might make sense to create a trust that benefits your spouse during his or her life while ensuring that those assets ultimately end up with the beneficiaries you choose. Additionally, you may want your children to receive your separate property (like a family heirloom or ancestral lands) at your death while other property remains in the trust until he or she passes, at which time whatever is left will go to your children. Creating these trusts involves multiple considerations, so it’s best that we talk before you decide the best path forward.
Wrapping It Up
Most of us want to take care of our spouse, our children, and maybe the rest of our family too. But, letting everyone else work out the details after you are gone or incapacitated means chaos, and, sadly, the risk of a family being torn apart. In a blended family this can be particularly disastrous. Blended families often have family dynamics that significantly impact estate planning decisions. I hate to break it to you but when you die, that already tenuous family “peace” you have is likely to break down completely if you do not have a plan in place.
It’s not just your immediate marriage that you should be concerned about – the marriages of every beneficiary named in your plan can affect your estate planning.
Blended families can’t rely on an off-the-shelf estate plans or make assumptions based on other families’ experiences. Why? Because every family, blended or otherwise, presents its own set of challenges, both personal and legal.
Proper estate planning can alleviate your concerns about your unique family situation, giving you the confidence and peace of mind that your wishes will be carried out.
Work with an experienced estate planning attorney to understand the obstacles and opportunities available to you and your family.
I can guide you and your loved ones through the process, discuss your wishes, and help you effectively plan for the future. If you would like further information or assistance, please contact Euless, Texas Estate Planning and Elder Law Attorney, Antoinette Bone, at (817) 462-5454 email firstname.lastname@example.org, or click here to go ahead and set an appointment :
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.
Nothing in this message is intended to provide legal advice. This message is for educational purposes only.