Blending a family can be a wonderful experience for families to build a new life together. However, it can raise estate planning issues, the most obvious of which is if there are assets a parent wants to see pass directly to children from a previous marriage or relationship. There are countless other scenarios for which a new estate plan can prove valuable.
But first, it is important to understand what a blended family is and why it is so critical to plan for your family’s future. And your own.
What is a blended family?
When defining a blended family, what might come to mind first is a married couple where one or both spouses have children from a previous marriage or relationship. However, that definition is far from inclusive.
Blended families come in all shapes and sizes. They can include step-siblings, half-siblings, and pretty much any combination of loved ones you can imagine. Think “Modern Family.” Your blended family, or, rather, your family, consists of anyone you want to include.
So, now that we have the definition of blended family ironed out, it is time to begin the process of including your blended family into your estate plan.
How blended families can start the estate planning process
Depending on when you will be beginning the estate planning process for your blended family, i.e., before or after your marriage, will determine how you might want to start.
Consider a prenuptial agreement.
If you are not yet married and you still have some time before your wedding day (required in the State of Washington for a prenup to be valid), a prenuptial agreement can help you put your estate planning goals for your blended family into action. Prenups assist in getting the conversation started between spouses about how they foresee their marriage. A prenup can be especially useful for remarriage, where there are a lot of different relationships involved.
Asking specific questions, clarifying each of your and your partner’s ideas about your upcoming marriage and, in turn, how you plan to structure your estate plan and who you intend to include, can lay the groundwork for a strong estate plan. First, you will have a clearer idea of what your marriage will look like. And, second, you will be able to convey what you have learned to your estate planning lawyer with greater clarity so they can address your individual needs and needs as a couple.
If you are already married and are first thinking about creating an estate plan for your blended family, not to worry. A postnuptial agreement can get the conversation started in much the same way a prenuptial agreement can. The only difference between a prenuptial and postnuptial agreement is that you sign the latter after you are already married.
That said, you don’t need either of these documents to discuss estate planning for your blended family with your spouse. But you will need to make some decisions about numerous issues, some of which you might not have even thought of yet. Again, a Seattle estate planning lawyer can help if you and your spouse pinpoint those issues and reach an agreement if you have trouble doing so.
Select a guardian.
Selecting a guardian is an important preliminary step toward creating a solid estate plan for your blended family. If the unthinkable were to happen, and you were to die, who would care for your minor children? Just because you are married does not necessarily mean you would, or even could, choose your spouse.
If, for example, you are divorced, your child’s other parent would typically have parental rights, barring any circumstances preventing those from taking effect or continuing. On another note, if the other parent is deceased or unable to fulfill their parental obligations, you would want to make sure the person you choose to be your child’s guardian is the best person for the role.
Where the other parent is not an option, a suitable guardian for a minor child could be your spouse or another relative such as a sibling who has reached majority, a different family member, or a close family friend. An estate planning attorney can help you clarify what scenarios you should prepare for when choosing a suitable guardian.
Decide how you would like to allocate your estate.
How you plan to allocate your estate between your children is a personal decision. Every blended family is different, and there is no formula for allocating bequests among children from a blended family, only what you believe will be best for the individuals involved.
The estate planning decisions you and your spouse make can turn on factors such as the age of the children and whether they have special needs, which you want to account for in your planning. You will also need to do all the typical decision-making that comes with traditional estate planning, such as picking an executor for your will, guardian(s) as discussed earlier, and trustees, addressed in the following section.
Given there are so many moving parts to consider, it is helpful to consult with a seasoned trusts and estates lawyer who is intimately familiar with estate planning for blended families. They will be able to guide you about the best and most practical ways to include your blended family in your estate plan. We service numerous counties throughout the State of Washington and can help. Call us today.
The best options for estate planning for a blended family:
When it comes to estate planning for blended families, some ways are more practical than others for ensuring your last wishes will be honored. Though you might not necessarily be able to avoid probate altogether, the option you choose can help the process be a smoother one.
One of the tax professionals who work closely with our estate planning practice can also help you make decisions based on the tax consequences involved in the option(s) you choose.
Testamentary trust (separate trust or family trust)
A testamentary trust is particularly useful in providing for minor children, those with special needs, or when, for any number of reasons, an individual proves they are not responsible with money management and would be better off with someone to supervise them. Further, a testamentary trust can safeguard beneficiaries from inheriting before the testator would like, whether because of age or maturity, or both.
Establishing a testamentary trust also gives you control over who manages the inheritance that you leave for your minor children. You have already learned that you may not have complete control over who is the guardian for your children if their other biological parent is still living and still has parental rights. You can, however, have complete control over who manages the money that you leave to help raise them. Many people feel reassured at knowing they will have another set of eyes (the trustee they appoint) watching their children grow up, especially if they no longer have the best relationship with the other biological parent.
One will can contain multiple testamentary trusts. A testator can create them per individual or for the blended family as a unit. A testamentary trust, though mentioned in the will, does not exist during the testator’s lifetime. For that reason, they are revocable during the testator’s lifetime as well as amendable. Therefore, all a testator has to do is make changes to their will. The important part is to make sure any changes you make to a will are valid.
It is important to note that any assets designated as part of a testamentary trust are subject to probate as part of a will. Once the will has been probated, the named executor can transfer those assets designated to become part of the testamentary trust into it.
From there, the trustee named in your will becomes the individual responsible for enforcing all rules concerning the management of the trust. Those rules can, for example, decide which assets in the testamentary trust will be distributed to its beneficiaries and during what timeframe.
Living (revocable) trust
A revocable trust is a type of living trust. Living trusts are created during the lifetime of the grantor. A living trust allows the grantor to manage and make changes to the trust as they see fit while they are alive. A grantor, for instance, can add and subtract beneficiaries and change the allocation assets for each beneficiary. The grantor would also retain the ability to buy and sell assets in the trust before their death.
People tend to favor revocable trusts given the options and flexibility they provide. The assets are there for the grantor’s use in an emergency. Grantors can also rebalance their bequests or make changes to their beneficiary list according to life passages, such as a birth or death, or if their relationship with a beneficiary changes.
A benefit to a testamentary trust is that the testator can make the trust the beneficiary of any assets rather than individuals. This is helpful with large assets, such as a house, which spouses in a blended family might choose to leave to their multiple heirs. Because the asset is held in trust, in this example, a house, it is much easier to fund expenses related to it following the grantor’s death as well as create rules to help prevent the asset from becoming the subject of future disputes between heirs.
Transfers that occur outside of a will upon death
There are various ways an asset can pass from one individual to another on death without their inclusion in a will, meaning they won’t become subject to probate. Among the most popular types of these are ownership structures, such as joint tenancies or tenancies in common or beneficiary designations that are payable on death (POD).
These types of designations override what might be in a will, even if the will’s instructions conflict with the beneficiary designation listed on an asset, such as an IRA. People often forget about changing these designations to match what they have outlined in their estate plan, causing unnecessary conflict. Disagreement or not, these transfer methods prevail and can cause divisiveness in a once happily blended family.
It is best to consult with an estate planning lawyer so the estate plan you create addresses all of your final wishes and is carried out in the way you intend. Moreover, if there are designations outside the will, your estate planning lawyer can balance those with the bequests included in your will, testamentary trust, or living trust.
Consult with a Seattle estate planning lawyer.
Our Seattle estate planning lawyers at Elise Buie Family Law Group understand how individuals can achieve peace of mind through a well-thought-out estate plan. Call our Seattle estate planning office today.