Planning for blended families can present unique challenges, in part because the interests of a current spouse and any mutual children often conflict with the desire to provide for one’s children from a previous marriage. For example, if all of an estate’s assets are left to the new spouse, the children from a previous marriage may not be provided for in the manner the deceased spouse would have wanted. After all, there is no legal obligation to support stepchildren. Furthermore, the surviving spouse might, upon his or her death, leave all of the assets to his or her children, thereby excluding the children of the spouse who passed away first. Similarly, if assets are left only to prior children at the death of their parent, there may not be enough assets remaining in the estate to provide for the current spouse or family.
Even with a harmonious blended family, failure to create and implement an estate plan may lead to unforeseen problems. In situations where death occurs without a will or trust in place, statutory intestacy rules may remove up to two-thirds of the deceased spouse’s estate from the current marriage and give it to the children from the previous marriage. This can happen even if the prior children are now adults and have less need for the assets than the spouse and minor children of the current marriage. In situations where the prior children are minors, an ex-spouse might be able to gain control of the assets. At the very least, each spouse in a blended family should have a will. Without one, assets will more than likely be distributed to heirs in a manner contrary to what the deceased spouse would have wanted.
A properly designed and adequately funded trust, or a combination of trusts, is a much better approach than a will for blended families. This approach can provide for the surviving spouse while ensuring a portion of the assets go to children from the previous marriage. We’ll discuss specific trusts in our next post.
