Divorce and remarriage are common. As advisors, we are obligated to help clients in blended families navigate these estate planning concerns.
Forty-two percent of American adults have a step-relationship of some sort, according to a recent article in The Huffington Post. Blended families bring an extra challenge to estate planning, and it's important for us to remind clients to have those difficult conversations with loved ones if they're contemplating another marriage.
In our experience, the ugliest family disputes that occur after someone passes away are not about money but possessions with sentimental value. Even the smallest item can have a significant emotional value, and squabbles over these belongings can cause rifts that are difficult to heal.
Clearly stating in a will which child or stepchild gets what, whether they are "yours, mine, or ours," can eliminate ugly disputes after a client passes away. Clients should identify who they want to inherit specific heirlooms, such as jewelry, furniture, photographs, or other personal effects. They should also choose a specific person to handle social media accounts after they're gone.
Make sure everyone understands those wishes up front, and be sure to get those wishes in writing in a will. This document should be updated regularly to take major life changes into account, including any time a child is born or adopted.
Who gets to make end-of-life decisions? If clients don't put their wishes in writing in a health care power of attorney and living will, their loved ones can be left with legal disputes and family fights at one of the most difficult times in their lives.
Children from a previous marriage may have very different ideas about what should be done in the event of your client's incapacitation than a step- or half-sibling. Without specifying those wishes in a living will, also called an advanced healthcare directive, there can be costly legal battles and anguish for loved ones.
If a client has children by a previous marriage, a trust can be a good way to protect their inheritance. It can also be used to help ensure any previous spouses or step-children who were part of that marriage are not inadvertently disinherited by the new relationship.
Without getting those wishes in writing, clients can leave their loved ones unprotected and without financial support unintentionally
One other way clients entering blended families can ensure their wishes are made known is by entering into a prenuptial agreement with the new spouse. While a prenup may not be necessary for a couple entering into a first marriage, for a second marriage or any more subsequent to that there are all sorts of complex issues that may make such an agreement not only useful but necessary.
Before entering into a new marriage, clients should discuss estate issues with the new intended spouse. A prenup ensures both parties enter into the relationship with a clear understanding. This can protect not only the client, but their loved ones as well.
Marriage should be a time for families to come together and rejoice. Blended families can be strong and supportive environments for everyone. However, a large part of that comes from everyone feeling they are taken care of when a loved one passes away.
To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.