Yours, mine, and ours. Sadly, in America the average marriage lasts only seven years, with one out of two marriages ending in divorce. As over seventy-five percent of divorced individuals eventually choose to remarry, blended families now outnumber traditional nuclear families. And while this family dynamic has become the new normal, it’s a far cry from what was portrayed on the classic television series, “The Brady Bunch.”
If you are part of a blended family, you face some unique estate planning challenges. These include providing for your current spouse if he or she survives you, and making sure that when your spouse dies your children will be taken care of. Obviously, after the first spouse passes, the family dynamic can change dramatically; what the surviving spouse ends up doing with his or her assets can often be unpredictable. Let’s explore just a few possible estate planning options.
Your spouse. A simple, albeit not wise, approach would be to leave everything to your spouse. As your spouse adores your children, you have no doubt that he/she will take care of your children after you are gone, right? Keep in mind that an unintended consequence of this approach might be totally disinheriting your own children! Consider this: After you are gone, if your spouse becomes incapacitated it is very likely that your spouse’s children will take over the financial affairs of the family. You don’t need a vivid imagination to see how that might turn into a disaster. What happens when your spouse dies? Or remarries? Without thoughtful planning, your assets may ultimately be inherited by your stepchildren, or even by the person who marries your spouse! Proper legal planning can avoid this potential pitfall.
Your children. Another solution is to leave assets to your spouse and your children. While this guarantees that your children will not be disinherited, this path may lead to unintended consequences. Leaving assets outright to your children opens up a wide range of concerns, including the possibility that they may squander their inheritance by spending or investing unwisely, or lose most or all in a nasty divorce, an untimely lawsuit, or through bankruptcy. Even if your children are adults, shouldn’t you still protect them from future creditors and predators?
Your ex-spouse. You probably don’t consider your ex, but your former spouse plays a role in your estate planning. Think about it. If you leave money to your minor children, it is likely that your ex-spouse will be appointed by the probate court to manage your children’s property. What happens if a child dies while single and childless? Who would inherit their assets? As the next-of-kin of your children, that individual can be your ex-wife or ex-husband.
Planning effectively for a blended family requires creativity, experience and know-how. Consult with an estate planning professional to formulate a plan that is right for you and your family.
Life can change in an instant. What are you waiting for?