There are plenty of things that get better with time like fine wines and cheese. There are also plenty that do not necessarily improve with time: like unresolved family tension. These days, with the number of blended families, unresolved tensions lead to serious estate planning and administration problems. Even worse, the blended family issue can multiply exponentially until it becomes understandably overwhelming.
Consider a couple in their 40s who get divorced. Most likely they will remarry to other people who are getting remarried. Their children are likely in their 20s and may get married, divorced, and remarried with children from both marriages. Now the couple, who originally had an estate plan that essentially passed their entire estate onto their children, has a much more complicated set of questions to answer. How should the divorcee draft an estate plan with her new spouse? Should his children be included? Should she keep a separate property trust? If her child predeceases her, should the assets flow to the minor grandchild? Should her child’s ex-spouse have control over those assets? It’s enough to make your head spin!
No one will tell you answering any of these questions is an easy task. In fact, it may end up being one of the most difficult tasks you’ve ever had. To add to the stress, if you are following my advice, you will have to ask yourself these questions on a regular basis when you review your estate planning documents. However, they are questions that need to be answered for the following reasons:
1. Honoring your wishes. How is anyone supposed to honor your wishes once you are deceased if they do not know what they are? Perhaps the remarried couple in my sample would each like their spouse to set aside some assets just for their children. Perhaps the remarried couple wants the assets to stay with them in case it is needed for long-term care of the survivor. Perhaps failing to address this issue will cause the children to say, “It’s what my mother would have wanted,” and the surviving spouse to say, “No, this is what your mother would have wanted.”
2. “Unfair” distributions. Often remarried spouses do not feel as attached to their step-children as they feel to their own children. If your spouse is given a power to make changes to the distribution plan over all the assets, it is not uncommon that she will distribute them to her own children and cut yours out entirely. Even in A-B Trusts in which each side was to be split equally between his children and her children, the surviving spouse will often amend the survivor’s trust effectively giving the survivor’s children 75% of the estate (all of the survivor’s and half of the other spouse’s share). The more time that passes, the more likely it is that the surviving spouse will change all or some of the distribution in favor of her own family. Properly addressing this possibility can go a long way toward preventing this potential.
3. Family Feuds. The underlying problem in each of the above scenarios is the potential they have to rip a family apart. In this line of work, I have seen it all: People who refuse to speak to their own parents or siblings because the “wrong” person got the wedding china, people who have spent their entire inheritance and more on legal fees to litigate their right to the inheritance, and other occasionally irrational, occasionally erratic, and typically unpleasant behaviors. If your estate administration ultimately devolves into this, the situation very rarely improves with time.
It is not uncommon to feel uneasy about how blending your family will impact your estate plan. In fact, it is completely normal to prefer to avoid the subject altogether. However, an open and frank conversation about resolving these questions is the best way to ensure that your family and your estate remain intact after you are gone.
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