Blended families are very common: About a fifth of married couples head such households.1 While blended families can offer joy and connection, they also introduce unique estate planning challenges.
Ensuring that your loved ones are cared for and that your wishes are honored requires careful, proactive planning. For blended families in particular, this can involve navigating a unique set of estate-planning considerations.
What is a Blended Family?
A blended family, sometimes called a stepfamily, is created when partners with children from previous relationships form a new family unit. This can include stepchildren, half-siblings, and sometimes even ongoing relationships with ex-spouses. The complexity of blended-family structures makes estate planning especially important, as the risk of unintentionally disinheriting loved ones or sparking family disputes can be higher than in traditional families.
Update Your Beneficiary Designations
One of the most common—and costly—mistakes in blended family estate planning is failing to update beneficiary designations on key accounts and policies. Many assets, such as retirement accounts and life insurance, pass directly to the named beneficiary, regardless of what your will or trust says. If you forget to remove an ex-spouse or fail to add your new spouse or children, your assets may not go to the people you intend.
To avoid this, review all your financial accounts, insurance policies, and retirement plans to ensure the correct beneficiaries are named. Consider designating your current spouse as the primary beneficiary and your children as secondary (contingent) beneficiaries. Or split the assets among multiple primary beneficiaries if you want to provide for both your spouse and children.
Revise Your Will and Legal Documents
Beneficiary designations are just one part of the wealth-transfer equation. Your will governs the distribution of most other assets, including real estate, personal property, and anything not covered by beneficiary designations. In blended families, it’s essential to update your will to reflect your new family structure and your wishes for both your spouse and children.
It can also be helpful to ensure your will clearly specifies who should receive your sentimental items, such as family heirlooms and collectibles.
Consider Trusts for Greater Control
Trusts can be a valuable tool for blended families, providing more control over how and when assets are distributed. A common approach is to establish a trust that provides income for the surviving spouse during their lifetime, with the remainder passing to the children from a previous marriage after the spouse’s death. This arrangement helps ensure both your spouse and children are provided for.
Be aware that it’s crucial to carefully select a trustee: naming your spouse or one of your children as trustee can create conflicts of interest, as their financial goals may not align. A professional, third-party trustee is often the best choice to ensure impartial management of the trust.
Also consider whether your children might have to wait many years for their inheritance if your spouse is significantly younger; in some cases, offering an immediate inheritance through life insurance or other assets can be a practical solution.
Make sure to have open and honest conversations with family members to help identify fair and practical solutions for everyone.
Work with Experienced Estate Planning Professionals
Blended families face complexities that can make do-it-yourself estate planning tricky. Issues like ex-spouses, stepchildren, comingled assets, and special needs require professional guidance.
Your wealth advisor can work closely with estate planning professionals and your attorney to design and review estate planning strategies and documents, helping ensure that your wishes are honored and your loved ones are protected. We can help you create an estate plan designed to support the best possible outcome for every one of your family members.
Sources:
1 “Multiple Partners, Multiple Kids”
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