Estate Planning for Blended Families

A second marriage can present special challenges in estate planning. You and your spouse may have children from previous relationships, as well as children together. You also probably have property and other assets you've brought to the relationship. If you're like most people, you want to provide for your current spouse's needs, while also ensuring that some (or all) of your assets ultimately will go to your children.

It's important to have an estate plan that fits your situation to provide for everyone you love. Without a thoughtful estate plan, you will have no way of ensuring your wishes are met.

Even if you trust your spouse and children—and your spouse's children—relying on them to "work it out" after you're gone isn't a plan. The good news is that you're not in this alone. Resources are available to help you get the plan you want.

Understanding the Legal Challenges of Blended Families

Estate planning for blended families can involve unique challenges. In a traditional family with two spouses who have only children together, estate planning is generally simpler. Blended families may consist of stepchildren and stepsiblings. Stepfamily members usually don't have the same legal rights as biological or adopted family members.

For instance, states often have laws that provide for minor children who are left out of wills. But these laws generally protect only biological and adopted children, not stepchildren. If you want to leave assets to your stepchildren, you must specifically name them in your estate planning documents.

Initial Questions to Ask When Making an Estate Plan

Before you decide which estate planning tools you want to use, you'll need to figure out your most important estate planning goals. Your wishes might change based on whether you or your spouse passes away first, so think through each scenario, unpleasant as it may be.

What Will Happen to Your Property?

Make an inventory of your assets (house, car, jewelry, other personal items, investments, insurance, retirement plans, and brokerage accounts) that you own solely and with your spouse. Think about what you would like to have happen with your assets when you or your spouse passes away.

Who Will Care for Your Children?

If you have minor children, think about who you'd like to raise them if you die before they reach adulthood. Would you want your new spouse to raise them? Or would you rather choose another family member as their guardian?

If your children's other parent is still alive when you die, the court will give custody to that parent, except under rare circumstances (such as parental rights being terminated). Even if the other parent is still alive when you make your estate plan, you should name a potential guardian in your will as a backup in case that parent dies before you or becomes incapacitated.

Who Will Care for You and Your Property When You're Sick?

Estate planning isn't just about planning for death. You should think about what will happen if you become unable to care for yourself. Do you want someone to make medical decisions for you? If so, who?

You can create a living will or health care power of attorney. A living will gives your wishes about end-of-life care, while a health care power of attorney lets you name someone to make medical decisions for you. In some states, these two documents are combined into one document called an "advance directive."

You should also name someone to handle your finances if you become mentally incapacitated by creating a financial power of attorney. You can save your family from arguments, stress, and legal challenges by making your wishes known before you are unable to speak for yourself.

Who Will Handle Your Funeral Services and Burial or Cremation?

Funeral arrangements and decisions about the final disposition of a person's body can also lead to arguments among family members. If you have grown children, they might want to make these decisions, especially if they don't have the best relationship with your current spouse. Even if your spouse and children get along, they might have very different ideas about a funeral or memorial service and whether to bury or cremate your body.

Review Beneficiary Designations and Change Them If Needed

One of the easiest ways to pass assets to another person is through beneficiary designations on insurance policies and financial and retirement accounts. Many people forget to change their beneficiary designations when they have a child (especially if it's a second or subsequent child), get divorced, or remarry.

Review any beneficiary designations you have made on insurance policies or retirement accounts. You might be surprised by what you find. Your ex-spouse might be listed as receiving 100% of the funds, or maybe you didn't update your designations to include your youngest child.

Beneficiary designations are a great way to make specific monetary gifts to loved ones. For instance, if you have an insurance policy and a retirement account, you could decide to give one to your spouse and the other to your children (or stepchildren). You could also divide them between your children and provide for your spouse in your will or trust.

Create (or Update) Your Will and Trust

One of the biggest mistakes people in blended families make is that they're not specific about leaving property to their children. This can create disappointment and tension if the children don't receive a sentimental item they're convinced their parent wanted them to have—even if it's of little financial value.

If you know there are specific items you'd like to leave your children, start putting together a list. Make a note to address these in your final estate plan. You can leave specific items by using a will or a trust. If you already have a will or trust, make sure they are updated to include your new spouse (and stepchildren if desired).

Leaving property outright in a will (that is, with no strings attached) to the surviving spouse may not be the best approach, because it doesn't ensure that the children ultimately benefit. As a result, many people in blended families use trusts to provide for a spouse, while making sure their children ultimately end up with their property.

Getting Help From an Estate Planning Attorney

An estate planning attorney in your state with experience in blended families can guide you to a completed plan. Remember, until you get your estate plan finalized, there's no way of confirming your wishes will be respected.