Since divorce is on the rise, as well as second marriages, blended families have become the new norm – the new modern American family. In today’s blended family, Spouse A and/or Spouse B might have children from a prior marriage, and they might have a child together as well. In these types of family units, there are unforeseen complications regarding inheritance that may surface, which can cause tension and damage family relations.
For example, as a spouse in a blended family, you probably brought both assets and children into your new marriage. Like most people, if something happened to you, you might leave all your assets outright to your spouse because you want to make sure your spouse is taken care of during their lifetime, and you also may want to ensure your children will receive a portion of your estate. However, without a proper plan outlining your wishes, your spouse is not legally obligated to pass along your children’s intended inheritance. Even though it sounds unlikely now, after you pass, your spouse and children may grow apart, or they might have conflicting interests down the road. The bottom line is that the surviving spouse always has the option to execute a new Will and disinherit your children. Or alternatively, if the surviving spouse is young, he or she may deplete most of your children’s potential inheritance, so that there is very little to nothing that will be transferred to them after he or she passes. Therefore, the question remains: How can you ensure none of your children become disinherited?
Fortunately, there are solutions to common estate planning problems that blended families face. In a well drafted Will or Trust, you can outline your specific wishes and goals, which can help ensure both your spouse, and all of your children, are taken care of when you are not around.
Many blended families have turned to Trusts to fulfill their estate planning objectives. Specifically, many people in blended families are turning to a QTIP Marital Trust. In this type of Trust, the surviving spouse can receive income from the QTIP Trust for his or her benefit throughout their life; however, he or she can be restricted from accessing the Trust’s principal, which would ultimately be transferred to the children upon the passing of the second spouse. Additionally, another protection provided in a QTIP Marital Trust is that the surviving spouse is not able to change the terms of the Trust, so he or she is prohibited from disinheriting your children.
Another alternative for blended families is that they can draft an estate plan that states upon the death of the first spouse, the surviving spouse will then provide gifts – monetary or otherwise – to your children. If this occurs, your children do not have to wait until the surviving spouse passes to inherit, and they are guaranteed to benefit from your estate. One way this is achieved is by purchasing a life insurance policy and designated the proceeds payable to your children. Thus, your children can receive a large cash sum immediately upon your death, and the remaining estate assets can be left to support your new spouse.
Whatever you decide is best for your family, it is important to know you have options. It is also very important to receive guidance from an experienced estate planning attorney to draft a plan that meets the various goals and needs of your family, which will both provide for a living spouse and your children.
Contact a Wills & Wellness attorney today, or attend one of our free educational talks in your neighborhood, to learn more about putting a plan in place that will protect and provide for all the members of your family.