Estate and Advance Care Planning for Blended Families

Updated

When someone finds love the second, third, or more time around, the blending of families ideally creates a broader family unit for support and caring. Unfortunately, even in the most harmonious situations, estate and advanced care planning issues can poke at tender spots and open deep wounds.

There are unique needs for blended families when it comes to estate and advance care planning. The sooner you get your ducks in a row, the more peace of mind you achieve as a family.

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End-of-life issues deal with some of the most sensitive subjects that any family faces. Who gets to make decisions about a loved one's care, and how will their belongings and assets be allocated? 

For many family members, asserting that they best know their loved one’s wishes helps them feel that their relationship matters most. And, it’s only natural to try to find power in frightening situations where medical conditions and death are beyond our control. But, you can stem much of the conflict and resulting hurt through estate and advanced care planning. 

Why Is Estate Planning and Advance Care Planning for Blended Families Important?

Blended families face different challenges as they plan for end-of-life care and the distribution of their estates. That stems from the broad spectrum of what blended families look like. 

Perhaps you raised your stepchildren from an early age after their other parent died. Your relationship is likely much closer than that of someone who remarried very late in life to a person with adult children that the new spouse only met a handful of times. These families have the same set of estate planning and advanced care planning tools, but how they use them leads to wildly different outcomes.  

If you’re part of a blended family, you’ll have to identify your goals for your estate and end-of-life care and perhaps be a little more clear and direct than some other people would need to be. Not only can too many cooks in the kitchen spoil the soup, but they can make it nearly impossible to reach a consensus regarding care and inheritance issues.

Just as blended families have the same tools available to them as other family types, so too do the same sets of probate laws. However, some topics especially impact planning for blended families. 

Your probate estate

As you start your estate planning journey, you’ll want to be conscious of the value of your probate estate compared to your non-probate estate. Not everything passes by the instructions in your will because your will only governs your probate estate, giving you even more options for dividing your wealth and passing it along in the way that best suits you.

Your probate estate consists of all the property and assets that do not transfer automatically through non-probate transfers. Payable-on-death designations, beneficiary deeds, and trusts all remove assets from your probate estate and as a result, the guidance of your will. 

These non-probate transfers happen outside of the administration of your probate estate, so no personal representative or court action is needed. Non-probate transfers can be a great way to make specific gifts to loved ones in blended families. And the beneficiary can access the benefits fairly easily with proof of their identity and your death.

However, keep in mind that payable-on-death transfers to beneficiaries only happen when all account owners die. So, if you and your surviving spouse co-own an account, a payable-on-death designation to your child might not be very effective as your spouse can continue spending or transfer the account balance as they wish.

Spousal or elective share

In separate property states, probate law assumes that most people intend to leave at least a portion of their estate to their surviving spouse, even if you made your will before marriage. That assumption leads to the existence of the elective or spousal share, which is a default amount your spouse can claim if they are omitted from your will. 

A married person can also opt to collect the spousal share if the spousal share is greater than the amount granted to them in their spouse’s will. The calculation of the spousal share depends on your estate and may vary based on the length of the marriage.

Community property and probate

Those living in community property states (Louisiana, Arizona, California, Washington, Texas, Idaho, New Mexico, and Wisconsin) experience a slightly different probate process. 

Fewer assets go through probate in community property states because anything acquired during the marriage is considered to belong to each spouse 50/50, regardless of whose name it is in. As a result, the surviving spouse automatically gets one-half of any of the decedent’s assets that were obtained during the marriage, including income. 

Unless a spouse signs a contract waiving community property entitlements, you cannot use your will or other estate planning measures to remove your spouse’s community property rights.

Estate Planning Strategies for Blended Families

Several estate tools exist that can create highly unique and customized estate plans that fit the needs (and address the challenges) of nearly any blended family situation. While they’re not unique to members of blended families, the estate planning options described below can be particularly useful for resolving some of the most common blended family concerns.

Premarital and marital agreements

Premarital and marital agreements are contracts between spouses created either before or after the marriage takes place. These agreements can be hard to enforce, so it’s important to work with an attorney to make yours as effective as possible. 

You can use these agreements to waive the spousal share or community property rights, establish financial support arrangements during the marriage, and define the rights and obligations of the surviving spouse when one of you dies. 

Premarital and marital agreements can be crucial for preserving the inheritance of your children from a previous relationship. 

Joint wills and will contracts

Spouses often visit an attorney together to make a will simultaneously, and the result could be a single will signed by both people or separate but nearly identical documents. 

While this can seem like a transparent, fair solution, the surviving spouse usually keeps the right to change their will even after the first spouse's death. As a result, they could make estate decisions contrary to previous discussions–including disinheriting beneficiaries and reallocating inheritances. 

To solve this problem, spouses sometimes choose will contracts. A will contract prevents the surviving spouse from changing their will after the first spouse's death. If they do, the beneficiary can sue for the value they would have received.

Life estates

Life estates can prove helpful for late-in-life remarriages where one spouse moves in with the other. For example, the home owning spouse might want to pass their property on to their children, but they also don’t want their spouse to be homeless. The solution to this problem is a life estate. 

When you grant someone a life estate, it lets them use the property for their lifetime, and after that, it passes on to a remainder beneficiary that you also designate in your will. So, for example, you could bequeath your spouse a life estate in the home you lived in together. You can also add a clause about the life estate terminating if the surviving spouse doesn’t occupy the home for a certain period of time, like if they move into a long-term nursing home or residential care. 

Trusts

Finally, various specialized trusts can streamline estate planning for blended families. Many people are familiar with a living trust that someone creates during their life to hold their assets. However, that’s just a very basic trust–many other types exist.

Bloodline trusts help ensure that your wealth passes only to your children and other descendants. If your children are reliable, one can be the trustee. However, if they become involved in a divorce or lawsuit, a successor trustee takes over. 

The bloodline trust protects your family’s assets from divorce, creditors, and improper management. You can set it up so that the trust terminates at your child’s death, and the remaining funds go to your grandchildren rather than your child’s spouse. 

Alternatively, spray or sprinkling spendthrift trusts allow you to create terms and conditions for distributing trust assets or income. The trustee holds a high level of discretion, so it’s essential to choose a professional or someone very trustworthy. Both children and spouses can be beneficiaries of these types of trusts, so you can arrange for the support for as many family members as you want.

Estate Planning Considerations for Blended Families

Proactive estate planning helps blended families tackle some of the thorny issues that can arise when a parent or step-parent dies. While the laws of intestacy serve as a default if you fail to engage in any estate planning, they rarely honor the close relationship many people have with their stepchildren or adequately deal with the financial realities of late-in-life remarriages.

Considerations for everyone

As your family structure changes, keep a few probate basics in mind. 

First, in most states, if you get a divorce after you execute a will, state law treats provisions leaving assets to your former spouse or nominating them to serve as personal representative as void. Technically, the law acts as if your spouse died before you.  

Second, keep in mind that when you leave assets outright to someone, whether through your will or non-probate transfer, the beneficiary becomes the true owner with the right to decide what to do with the assets. Outright ownership, also called fee simple or fee absolute, gives the full bundle of property rights to the new owner. Lesser options exist, like life estates, which give someone the right to use something only during their life. 

Considerations for multiple marriages and stepchildren

If you have no biological or adopted children of your own, you might want to leave some of your estate to your stepchildren. Making a will or another estate plan is critical in this situation because the laws of intestacy do not count stepchildren among heirs who can inherit. 

Considerations for families with stepchildren and biological or adopted children from another relationship

Parents of children from a previous relationship typically use their estate plan to ensure that some portion of their estate goes to their own children outside of the control of their new spouse. These funds might support minor children or help them with college or getting started with their adult lives. Or, if the children’s other parent died, it could represent the remainder of the previously deceased parent’s estate or contribution to the family finances. 

Several options exist for managing this situation, but the least certain one is relying on your surviving spouse to do as you hope. The Grimm Brothers used the trope of the evil stepmother because it represents a family situation as old as families themselves, regardless of the gender of the new spouse.  

Many parents make their children beneficiaries of non-probate transfers. These include life insurance policies, bank accounts, and other financial accounts that pay the balance of the account directly to the beneficiary upon the death of the account holder. These transfers avoid the probate process and can typically be accomplished easily with a death certificate and the beneficiary’s photo ID. 

Considerations for families with stepchildren who you want to be excluded from inheritance or gifts

Some of the most challenging situations arise when a spouse doesn’t want their stepchildren to inherit from their estate. Married couples sometimes make a joint will, which is a single will shared and jointly executed by both people. That eliminates the privacy that typically comes with making a will. And, even if they do execute their own documents, spouses often work on them together. 

Additionally, married couples tend to include each other in their wills as beneficiaries. Separate property states make it challenging to disinherit a spouse through the implementation of the elective share, which lets the spouse collect a default amount even if left out of the will. 

While you may want your spouse to benefit from your estate if you die before them, the consequence is that then your estate could indirectly go to your stepchildren via your spouse upon their death. Once you bequeath an asset outright to your spouse, they get to decide what happens to it during their life and at their death.

Both scenarios lead to difficult conversations as one spouse reveals that they don’t want the other’s children to inherit. Of course, you might have many motivations that have nothing to do with whether or not you like your stepchildren–perhaps your stepchildren already inherited from their grandparents, or you need to guard your own children’s legacy from their deceased parent.

Create a functional plan

Fortunately, many estate planning tools exist to help you handle the logistics of your estate and to navigate these situations, whatever your motivation. To give your spouse use of your property during their life without transferring it to them outright, you could grant them a life estate. Then, when your spouse dies, the property passes to the remainder beneficiary of your choosing.

Alternatively, spouses sometimes engage in will contracts, which is where they each make a will contingent on promises they make to each other. For example, a wife might leave her estate to her husband in her will only if he promises to make a will that divides his entire estate equally among their combined children and vice versa. These provisions could be in a combined will or separate wills. 

You could also consider a trust, which gives you more options for managing your estate after your death beyond simply bequeathing assets to a new owner. If you have sufficient assets, you might give your spouse an allowance during their life rather than preserving the bulk of your estate for your own children or other beneficiaries.

Estate Planning Checklist for Blended Families

The options for estate planning don’t change for blended families, but the importance of planning often increases. 

  • Last will and testament: A will creates the foundation of any estate plan. You nominate your personal representative, a guardian for minor children, and detail the distribution of your probate estate. You can create a will online in just a few minutes if you don’t already have one.
  • Non-probate transfers: Many people transfer assets outside of their probate estate via payable or transferable on death beneficiary designations. These are typical on life insurance policies, retirement accounts, bank accounts, and investment accounts. Many states also allow you to transfer real estate outside of probate using beneficiary deeds.
  • Trust: While the costs and set-up of a trust can outweigh the benefits for some people, they can preserve wealth and give you a higher level of control over your estate than a will alone. 

Advance Care Planning Considerations for Blended Families

Advance care planning benefits both you and your loved ones. First, it ensures that your wishes are known and followed if you cannot make decisions for yourself or communicate your preferences. Second, and perhaps even more importantly, it removes the burden of making hard decisions from your loved ones and helps them feel confident that they’re only following your wishes. Deciding to end care for a loved one can haunt someone forever.

Advanced care planning can include several documents, including a durable medical or financial power of attorney, a health care directive, a do not resuscitate order, etc. These documents can work together to appoint someone to make decisions on your behalf and guide that person’s actions based on your preferences.

Considerations for everyone

Without an advanced care plan, your loved ones might struggle to obtain the authority to make important decisions for you and take care of you. And sadly, conflict in the family arises all too often as different values and views on life lead them to different decisions.

In emergency care situations, hospitals often have a system for designating a healthcare proxy. This person is typically the spouse, or if the patient is unmarried, an adult child, or the other closest family member, they can find. However, that designation serves as a means to an end for the hospital. It doesn’t give the proxy any authority outside of the hospital to access bank accounts, government benefits, or even arrange nursing home placement. 

In these situations, hospitals rely on marriage or blood relations as a presumption of closeness and authority. However, this might not reflect your true wishes, especially if you consider your stepchildren family and would prefer them to act on your behalf rather than a sibling, niece, or nephew.

Your loved ones will have to seek guardianship through the court system for authority recognized outside the hospital. Besides being an added expense, it’s also additional stress during a time that’s likely already very hard to bear. A well-made advanced care plan can help your family avoid the court system and grant them all the powers they need to care for you. 

Considerations for multiple marriages and stepchildren

Each divorce, death of a spouse, and remarriage should trigger you to review your advanced care planning documents. With these big life changes, you’ll likely find yourself wanting to update the people you gave authority to in your documents. 

Additionally, you might find that your priorities and preferences change as you age or develop serious medical conditions. 

Considerations for families with stepchildren and biological or adopted children

As you create your advanced care directives, managing conflict between adult children from a previous relationship and your current spouse can be one of your last gifts to your family. 

It’s not uncommon for someone to appoint an adult child as a medical or financial decision-maker rather than the spouse from a late-in-life remarriage. After all, you could have 40 or even 50 years with an adult child compared to just a few years with a new spouse. 

You know your family best, and you can use your advanced care plan to preemptively address any conflicts that might arise. For example, you can specifically list who you want to be permitted to visit you in a care setting to circumvent family members from trying to bar each other.

Advance Care Planning Checklist for Blended Families

By creating a thorough advance care plan, you remove the burden of hard decisions from your loved ones–and prevent conflict over who should be making those decisions. Putting your wishes in writing relieves them of second-guessing themselves and trying to recall every small mention of your thoughts on life-sustaining measures and other treatments. 

The gift of peace of mind and knowing that they just followed your instructions is one of the most loving things you can do for your spouse, children, or other loved ones.

  • Advanced Medical Directive: Your advanced care directive, also called a living will, serves as a master document regarding your wishes if you lose the ability to communicate them yourself.
  • Durable power of attorney: A durable power of attorney retains power even after you lose capacity. You can appoint someone to make financial decisions, medical decisions, or both. Your power of attorney follows any directions or wishes you laid out in your advanced medical directive. This document can help prevent your family from needing to go to court for guardianship.
  • Do Not Resuscitate Order (DNR): Many states allow you to make specific DNR orders. This information can also be in your living will.
  • Organ and Tissue Donation: Like a DNR, several states have separate forms you can fill out regarding your desire to donate your organs or tissues at death. You can include this information in your living will as well, but it can be easier for medical providers to access it in an emergency if you sign up with your state’s donor organ organization and add the designation to your driver’s license if offered by your state.

Frequently Asked Questions: Estate and Advance Care Planning for Blended Families

The dynamics of blended families can bring an additional layer of challenge to already-tough end-of-life situations. If you anticipate that your family will be especially contentious, it can be well worth discussing with an attorney regarding steps to mitigate future conflict and confusion.

How do people typically split an estate in a blended family?

Every person gets to dispose of their estate as they see fit. In blended families, many factors will influence the testator’s decision, like the length of time of each marriage, their relationship with their stepchildren, and the needs of the possible beneficiaries. 

Many discussions involving stepchildren emphasize ways to keep them from inheriting. However, especially in long-term relationships, many people love and care for their stepchildren as if they were their own. Every relationship and family is different, and the beauty of estate planning is that it lets you customize your final instructions to reflect your values and, ultimately, craft your legacy.

How can you protect your assets from your stepchildren?

Several options exist for keeping your assets from your stepchildren, including trusts, non-probate transfers, and making bequests in a will. Just as important as knowing what to do is knowing what not to do. 

Leaving assets outright to your surviving spouse relinquishes your control over your estate. Your spouse can then pass along your assets to your stepchildren or any other beneficiary they choose after your death. Of course, any beneficiary you choose could ultimately decide to share their inheritance with your stepchildren. 

How can you protect your assets in a second marriage?

Those entering a second marriage late in life often want to ensure that the bulk of their wealth passes to children from their first marriage, especially if their first spouse died and they are safeguarding their children’s parent’s estate.

In these situations, many couples enter pre-nuptial agreements before getting married. Those agreements typically waive the spouse’s right to an elective share, effectively waiving their right to inherit. This allows you to pass your estate to your children or other beneficiaries. 

Alternatively, some people choose to put their assets in a trust, removing them from many of the rules of probate. A trust can give you more flexibility and options for distributing your wealth after your death. 

What are some common issues with blended family inheritances?

Blended family inheritances can strike painful nerves in families with children who are resentful of the remarriage or feel replaced by new children. These emotions can fuel and fan the flames of conflict over the inheritance of property and money. 

You can take a few practical steps to mitigate some of these big emotions and to ensure that your estate passes the way that you intend.

First, know that if you leave your entire estate to your spouse and you die before them, then your estate becomes your spouse’s property. Then they get to dispose of it as they want, whether it’s spending it during their life or passing it on to their chosen beneficiaries.

Another common pitfall happens to people who don’t engage in estate planning and assume their state’s intestacy laws will take care of things but don’t realize that stepchildren are excluded from intestate probate succession. To include them, you will need to take active steps, whether through your will, trust, or non-probate transfers.

Start Estate and Advanced Care Planning Early

All of these conversations are easier said than done with a new spouse. The topics of death and dying are far from exciting courtship conversations, but as with most financial topics, the earlier you two can get on the same page, the easier the process will be.

In a worst-case scenario, you’ll learn that a potential spouse might be pursuing a relationship for the wrong reasons, but just as often, you’ll find a partner who shares the same commitment to protecting family. 

Ideally, you can start these conversations before you get married so that you can solidify some terms in a premarital agreement. However, if you’ve already shared last names, it’s not too late to start work on this. The longer you delay, the more opportunity there is for your health to change or some accident to happen, putting everyone you care about in the uncomfortable position of trying to determine your wishes and squaring off against each other to protect their own interests.

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