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Blended Families -- How will the Estate Plan work?

Posted by Bridget Murray | Jun 06, 2016 | 0 Comments

Strategies for Successful Estate Planning for Blended Families

Maintaining the integrity of a blended family after one of the spouses passes requires strong estate planning so that inheritance battles don't destroy what often takes years to build.

When a spouse passes or a divorce occurs in a blended family, the concerns of step-children about not losing their inheritance or ownership of family items are very high. In credit.com's article "How to Keep Your Kids From Fighting Over Their Step-Parent's Inheritance" a number of strategies are used in an effort to ameliorate problems common to blended families.

When a spouse dies, the surviving spouse may feel some sort of real or perceived threat from their step-children over their inheritance. Solid estate planning can decrease or even eliminate the potential for this type of problem. Strategies include planning methods such as using a revocable living trust rather than a will.

A trust can be preferable when trying to protect your second spouse's inheritance because it's much harder for an unhappy step-kid to break a living trust. It's typically created way in advance of death or disability. Wills are in many instances signed at the last minute in hospital rooms or nursing homes. These scenarios can raise suspicion of undue influence from family members and lead to a challenge. In addition, it's more effective to disinherit an estranged child using a living trust. Only beneficiaries of the trust have a legal right to set aside its provisions—a disinherited child isn't a beneficiary. But with a will, anyone in the family can contest its terms. The trust can eliminate the possibility for a lawsuit.

A living trust can also be better than a will because its assets will flow privately to the surviving family after the first spouse dies—they don't go through probate. Wills are required to go through probate. That is the only place they have any sway. Probate delays the distribution of assets in a will, and it's a public process. This makes it easier for an estranged step-child or one of the children from the deceased spouse's prior marriage to find out who's getting what, which might motivate the kid to contest the will.

Whether you use a living trust or a will to distribute your assets after your passing, you can also add language to either document to decrease potential for of a contest. You can include a No Contest Clausewhich stipulates that if somebody files a lawsuit in an attempt to litigate your estate plan, that person will get nothing. You can also give your surviving spouse a "limited power of appointment," which lets him or her cut an estranged child out of your plan—even if there's no legal challenge. It could be used in the event a child just tries to harass or intimidate the surviving spouse or other family members.

Estate planning for blended families is a far too complicated to do on your own with an online will or do-it-yourself trust. A qualified estate attorney will be able to help you create an estate plan that will preempt many of the common problems.

At the same time there is concern for the surviving spouse, often items of sentimental value should go to children as directed.  A completed personal property memo, referenced in the will or trust, and shared with family members is a way to be sure that mom's favorite pair of earrings, for example, go where she wants them to.

Referencecredit.com (April 14, 2016) "How to Keep Your Kids From Fighting Over Their Step-Parent's Inheritance"

About the Author

Bridget Murray

Attorney Murray has been practicing in the area of Estate Planning for twelve years. Prior to becoming an attorney, she wrote for The Economist in Tokyo, worked as a financial analyst for State Street Bank, and earned an MBA in International Management (Thunderbird School of International Busines...

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