Estate Planning for Blended Families
Blended Family Basics
Times have changed. In the new millennium, blended families now outnumber traditional nuclear families. In fact, one of three Americans is now a stepparent, a stepchild, a stepsibling, or some other member of a blended family*. And the number is likely to grow, based on current statistics and trends.
While most of us don’t live like Hollywood celebrities, Hollywood trends often reflect magnified versions of cultural trends. For example, when Kris (Kardashian) and Bruce Jenner married in April 1991, they each had four children from previous marriages. Kris had Kourtney, Kim, Khloe and Robert from her marriage to the late Robert Kardashian and Bruce had two children (son Burt and daughter Casey) with his first wife Chrystie Crownover and two sons (Brandon and Brody) from his marriage to Linda Thompson. The reality show couple later had two more children together — daughters Kendall and Kylie. If you’re keeping track, that’s a whopping 10 kids.
Blended families, whether they include one, two or ten children, face many unique social, psychological and economic challenges.
Fortunately, there are numerous organizations and support groups dedicated to helping blended families with these challenges. Unfortunately, little attention has been paid to the critical Life & Estate Planning challenges confronting blended families. These challenges include disinheriting your ex-spouse, providing for your new spouse and providing for your own children — and protecting their inheritance.
Without proper legal planning, your ex-spouse (as surviving parent/guardian) would likely be appointed by the probate court to manage the inheritance you leave to your children. To make matters worse, what if your children later predecease your ex-spouse, and are single and childless at that time? Who would inherit your assets then? That is right … your ex-spouse, as the next-of-kin of your children.
Your New Spouse
Chances are you made a few solemn promises to your new spouse on your wedding day. Among them were promises to be there through thick and thin, personally and financially. Accordingly, most spouses in blended families tend to blend their wealth, too.
Warning: If you predecease your new spouse, then you may forever disinherit your own children from your share of such blended wealth! Thereafter, upon the death of your new spouse, your assets may be inherited by your stepchildren, or even by your new spouse’s next spouse and their children.
Your Own Children
Whether children are reared in a traditional nuclear family or in a blended family, great care should be given to protect any inheritance both for them and from them. Wealth representing a lifetime of your hard work and thrift can be squandered in very short order, or can quickly vanish through divorces, lawsuits or bankruptcies.
Want to make your Life & Estate Plan heir tight? If so, you should consider a Discretionary Trust. As the name implies, such a trust makes distributions only in the sole and absolute discretion of the Trustee. The key to a successful Discretionary Trust is selecting and entrusting an appropriate Trustee with broad discretionary authority to protect your wealth for and from your heirs. The non-fiduciary position of Trust Protector can be created to appoint and even remove such a Trustee to ensure fulfillment of your objectives. As such, the Trust Protector serves as an ongoing Guardian Angel.
This has been a very cursory examination of a very complex subject. Be sure to engage appropriate legal counsel before you pursue any financial or legal strategy to overcome blended family challenges.
* Source: www.winningstepfamilies.com.