Estate Planning for Blended Families
Sep 24, 2021 | Written by: Share|
Many families include children from prior spousal relationships. During the lifetimes of both spouses, joint decisions can easily be made regarding family finances that are fair to all concerned. However, issues can arise when one spouse passes away leaving a surviving spouse who has children from a prior relationship. The concern is that the surviving spouse might leave all of the combined family assets to just his or her children, to the exclusion of the children of the first spouse to pass away. But there are solutions to this potential problem.
Various trust arrangements are available to benefit both the surviving spouse and the children of the deceased spouse. However, these trust arrangements can be complicated. For example, if a large portion of the family wealth consists of real estate that will continue to be used by the surviving spouse and his or her children, then there will be little or no material benefit to the children of the deceased spouse until the surviving spouse passes away and the real estate assets can be either distributed in kind or sold and the net proceeds distributed among all the children.
One solution is for both spouses to obtain life insurance coverage so that if either spouse were to pass away, then his or her children will receive the insurance proceeds and the marital assets can all pass to the surviving spouse and eventually to the surviving spouse’s children. However, this is sometimes impractical because the life insurance coverage is often too expensive or unavailable. Other options must then be explored.
The most important thing to remember is that Wills are ambulatory, meaning that you can always change your Will during your lifetime. Quite often spouses with blended families have an “understanding” that the surviving spouse’s estate will benefit all of the blended family’s children equally. However, absent an agreement in writing, under New Jersey law there is no obligation on the part of the surviving spouse to leave any inheritance to the children of his or her deceased spouse. Therefore, if the intention of the spouses is to equally benefit all of the blended family’s children after the surviving spouse passes away, then they need to put that agreement in writing with language that will make the agreement judicially enforceable if necessary.
Basic estate planning is essential for all families, however, there is generally a greater need to have advanced estate planning in place for blended families. Call me for an estate planning consultation. It may be the best way to protect your family legacy.