Estate planning for Blended families can face complex challenges. Issues can arise between spouses or between children and their spouses. Typically, individuals in blended families want to provide for the spouse as well as the children from the previous marriage. In some cases, they also want to provide for the children from their spouse’s previous marriage.

Blended families take several forms and these may include:

  • Married couples in which one or both spouses have children from a previous marriage.
  • Families with children who are in second or subsequent marriages and who have children from previous marriages.
  • Families with children whose spouses have children from previous marriages.

These are some of the challenges that are associated with estate planning for blended families:

  • The potential for children to be disinherited.
  • Delays in the children’s receipt of inheritance until after the death of their parent’s spouse.
  • The need to protect assets from former spouses.
  • Disputes over division of authority or responsibility.

Prenuptial Agreement- Prior to the marriage, a prenuptial agreement should be signed.  Essentially the prenuptial agreement provides that what each spouse brings to the marriage remains their separate property.

Irrevocable Life Insurance Trusts (ILITs)- An ILIT lets a person provide for their children with life insurance and use the remaining estate to provide for the spouse. The trustee of the ILIT purchases a life insurance policy your life and you pay premiums. ILITs offer two major advantages. They prevent children from being disinherited because the trust names them as sole beneficiaries of the life insurance policy, and they ensure that children will receive inheritances promptly because the policy will pay the trust immediately upon the client’s death.

Contract to Make a Will- In second marriage situations, typically both spouses have children by a previous marriage.  They intend to provide primarily for their surviving spouse, but upon the death of the surviving spouse, each party wants their assets to go to their respective children.  If each spouse makes a will leaving everything to the surviving spouse, the surviving spouse can change his or her will after the death of the first spouse and can eliminate the children of the deceased spouse.

One solution to this problem is a contract to make a will.  The contract would provide that each party make essentially a reciprocal will and that the surviving spouse agrees not to change or revoke the will after the death of the first spouse.

Mutual Waiver of Elective Share-In situations in which the parties have not executed a prenuptial agreement, they may nevertheless waive their right of elective share.  Waivers may be joint or separate.  Joint waivers are executed prior to the death of the first spouse.  Separate waivers may be executed prior to or subsequent to the death of the first spouse.  A waiver of an elective share constitutes a transfer for Medicaid eligibility purposes.

Trusts- In second marriage situations, trusts for the surviving spouse are often a solution.  The trust may provide for income only to the spouse or may be a complete support trust for the spouse, with the remainder to the children of the first marriage.

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