Estate Planning for Blended Families
When you are preparing to marry and blend your family with your new spouse’s, you’re probably not thinking about endings; you’re focused on your new beginning. While your marriage is certainly a time for joy, a bit of planning ahead can make sure that joy lasts: for you, your spouse, and your children.
Why is estate planning important for blended families?
The truth is, estate planning is important for all families, but it’s even more important for blended families in which one or both spouses have a child from a previous relationship. Finances can be complicated, as can personal dynamics. If you don’t plan ahead, when one of you passes away, the surviving spouse, and all of the children, must deal with the uncertainty left behind.
When should we do our estate planning?
You can, and should, start your estate planning before you marry, with a prenuptial agreement. While many people associate prenups with divorce, they are also commonly used as an estate planning tool for blended families.
Couples in a second or subsequent marriage have often accumulated more wealth before entering into the marriage than younger couples getting married for the first time. They may also have children from those previous relationships, and they may want a significant portion of their assets to go to them.
A prenuptial agreement allows couples to specify that premarital assets are separate property designated for biological children. That can not only protect your children’s inheritance, but prevent conflict between them and your new spouse (as well as costly disputes over your estate after your death).
If you didn’t create a prenuptial agreement before your wedding, there’s no need to panic; you can create a postnuptial agreement at any time after your marriage to achieve the same goals. While a prenup or postnup is helpful to clarify property rights, it’s still important to have a will, a trust, or both, to give effect to your estate plan.
In addition, you and your new spouse should execute powers of attorney and advance directives to clarify who has the right to make financial, legal, and medical decisions for you if you can’t make them for yourselves.
What are the risks for blended families without an estate plan?
Without an estate plan, you are counting on everything going right if you die or become incapacitated. Your new spouse and your children might get along well. They might correctly infer your wishes, and agree on how to carry those wishes out. Unfortunately, the reality is often different. It’s a gift to all of your loved ones to eliminate uncertainty by making your wishes clear with an estate plan. Otherwise, one (or more) of the following situations could arise.
You become incapacitated, and conflict ensues.
Estate planning isn’t just about what happens to your stuff after you die; as mentioned above, it’s also about incapacity planning: who gets to make important decisions for you if you are unable to.
Imagine a scenario in which you are seriously ill and unconscious. Your children and your adult spouse disagree about what treatment you should receive. They should be focusing on you and providing support and comfort to you and each other; instead, they are fighting bitterly above your hospital bed over who should have the right to decide on your care and manage your money.
If that’s an uncomfortable thought, know that you have the power to avoid that situation by making your wishes clear through your estate plan.
Your estate is divided according to state law, rather than your wishes.
New Mexico, like other states, has intestacy laws that dictate how a deceased person’s (decedent’s) property will pass after their death if there was no estate plan in place. These laws are designed to approximate what most people would do if they had a will.
But estate planning is not one-size fits all, especially when you have children from a previous relationship. Intestate succession can lead to unintended consequences, such as your spouse receiving more (or less) of your estate than you would have wanted.
Your spouse and children (or other relatives) end up fighting over your estate.
The number one reason for creating an estate plan is to protect the people you love, and that doesn’t just mean financially. It also means protecting them from needless conflict, especially at a time that is already stressful.
It’s no secret that there is often tension between a new spouse and the other spouse’s children from a previous relationship, and that tension can escalate into open hostility in the wake of a death. But even if your spouse and children get along well, lack of an estate plan (or lack of clarity in a plan) can throw a wrench in the works.
A common scenario is for both the children and the new spouse to believe they should inherit the bulk of the estate. Unless you make your wishes clear in a legally enforceable estate plan, conflict is likely to ensue. That could mean costly litigation, permanently damaged family relationships, or both.
We often tell clients that failing to make an estate plan doesn’t eliminate stress; it just shifts it to the people you love after you’re gone. While making an estate plan doesn’t guarantee harmony for your blended family, it will definitely reduce potential sources of conflict.
Work with an Experienced Estate Planning Attorney for Blended Families
The best time to get started on an estate plan for your blended family is before you get married. The second best time is now. To learn more, contact the Law Offices of Dana M. Kyle to schedule a consultation.
