In a Blended Family? Your Estate Plan is Ripe for Disaster from "Accidental" or Intentional Disinheritance, Health Care Crises, and Family Disputes

Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning

Blended families—families consisting of a couple and their children from the current and past relationships—face a host of unique challenges when it comes to developing a well-designed estate and asset protection plan.

Marital Rights & Estate Planning

Most people think of prenuptial agreements as a legal document whereby an engaged couple agrees in advance as to how assets will be divided in the event of a future dissolution of a marriage. However, marriage also brings several estate planning-related rights that should be considered, such as:

  • Intestacy rights: If you die without a Will or estate plan, the North Carolina intestacy laws determine how your estate will be divided, including a portion to your spouse;
  • Elective Share rights: If you die having disinherited your spouse or leaving your spouse only a small inheritance, your spouse may be entitled to claim an elective share of your estate based upon the length of the marriage;
  • The Doctrine of Necessaries takes that hold ‘in sickness and in health’ portion of the vows seriously—your spouse can be held financially responsible for your medical bills; and
  • Dower rights: An interest that a person may have in the real property of his or her spouse.

These rights can be addressed in a well-drafted prenuptial agreement. Or, if you are already married, consider a post-nuptial agreement.

Prenuptial Agreements: Important Estate Planning Tool for Blended Families

For those that have children from prior relationships, prenuptial agreements can be important for a harmonious estate plan. A well-drafted prenuptial or post-nuptial agreement can:

  • Waive any rights to each other’s estates under the intestacy rules;
  • Waive any elective share rights to each other’s estates;
  • Waive any down rights to each other’s estates.

If you are already married and have a blended family, then consider a postnuptial agreement. However, it’s important to understand that there are many estate planning issues for blended families and a prenuptial agreement or postnuptial agreement is not a substitute for proper estate planning.

Prenuptial Agreements Are Not A Substitute for Proper Estate Planning

In the past, prenuptial agreements were primarily for the rich and famous, but with divorce rates reported to be over 50% in the U.S., more and more of our Wake County clients are using prenuptial before tying the knot (or post-nuptial agreements later one).

While a prenuptial or postnuptial agreement is a good start, additional estate planning measures are especially critical for blended families. A well-designed estate plan can eliminate family fighting between the surviving spouse and children, eliminate the risk of your children being disinherited if your surviving spouse remarries, and protect your children’s inheritance if your surviving spouse should need long-term care.

“Accidental” Disinheritance

Unfortunately, it is far too common for children of blended families to be “accidentally” disinherited. Here’s how it happens:

Bob and Mary are married. Bob has two children from his first marriage. Bob and Mary have one child together. Having been married a long time, Bob and Mary have the majority of their assets titled jointly and their estate planning documents provide that when the first spouse dies, everything will pass to the surviving spouse, and then when the surviving spouse dies, the estate is to be divided equally between the collective 3 children. Bob dies and everything passes to Mary. Several years pass before Mary meets John. Eventually, John and Mary marry and begin building a life together. Ten years later, Mary dies. Due to a variety of factors regarding how Mary handled the assets during the marriage, marital rights, and such, a majority of Mary’s estate passes to John and Bob and Mary’s children are “accidentally” disinherited.

A well-designed estate plan could have provided that upon Bob’s death, the assets were to be held in trust for Mary’s benefit. This would have kept the inheritance separate and protected from the eventual remarriage so that when Mary died, the remaining trust assets would have still been distributed to Bob and Mary’s children rather than going to John.

Intentional Disinheritance

Sadly, this is a real-life example from a past client, though the names have been changed to protect their privacy:

Tom and Susan were in a second marriage. They each had two children from prior relationships. Together, they set up simple wills that left everything to each other and then equally to the 4 children. Tom died. Over time, Susan and Tom’s children fell out of touch. Eventually, Susan revised her Will to state that upon her death all assets would be divided between her two children only. Tom’s children were intentionally disinherited by Susan.

Health & Long-Term Care Expenses During Retirement

Even when couples have a prenuptial agreement and keep their finances separate, that can all go out the window in the event of a medical crisis or long-term care need. The Doctrine of Necessaries holds spouses responsible for each other’s medical bills—and this is something that can’t be waived in a prenuptial agreement.

A well-designed estate plan that includes asset protection planning can potentially mitigate your exposure to medical bills (if the plan was set up before the medical event) and should include long-term care planning to ensure that both of you can receive any needed long-term care while maintaining as much dignity and independence as possible without reeking financial devastation on the household finances.

Recipe for Family Discord

Blended families are also ripe for family discord after the death of one of the spouse’s, especially if all or a majority of the estate is being left to the surviving spouse. Stepchildren often begin scrutinizing the spending habits of the surviving spouse—especially if the surviving spouse is younger and therefore closer in age to the children. While arguably no one is entitled or should ‘expect’ an inheritance, the stepchildren can often become resentful that they won’t receive anything until the surviving spouse dies if they receive anything at all.

Let Us Help You Create a Well-Designed Estate Plan For Your Blended Family

We’ve helped thousands of Wake County-area residents design and create an estate plan. We understand the unique concerned faced by our married clients in blended family scenarios and can help you design a plan that fits the unique needs of your family. Call us at 919-443-3035 to discuss how to get started.