Article by Beth Ann R. Lawson, Esq.
Estate Planning for blended families is and should be of the utmost importance to couples in a marriage where either they or their new partner, or both of them, have been in a prior marriage. A blended family is defined as a family consisting of a couple and their children from the current and all previous relationships. How do we plan for our spouse while still protecting our children from a prior relationship(s)?
A blended family in America is not a unique occurrence. Statistics indicate that over 50% of American marriages end in divorce, showing that up to 41% of first marriages, 60% of second marriages, and 73% of third marriages end in divorce. Wow! What this means is that your estate planning for a blended family will be very different from first marriage estate planning. In a first marriage, many individuals leave assets first to their spouse and secondly to their joint children. In a blended family, we often want to protect our existing spouse while still protecting our own children, all at the same time.
For blended families, estate planning best begins prior to marriage. A pre-nuptial marital agreement is the gold medal for creating a more organized division of assets in a divorce in blended families. Both parties agree to asset division if necessary while the parties still want the best for everyone. That agreement is memorialized in a formal pre-marital agreement. Hopefully, the parties have discussed the issues and both families understand where everyone stands in the estate plans for the newly blended family.
In Virginia, it is important to have clearly stated estate plans in a blended family which coordinate with laws on an augmented estate/elective share. If you are not careful coordinating your document (or lack of any document if you are intestate) with Virginia law on an augmented estate/elective share, your estate may well be contested in court by your descendants or the new spouse. How can you protect all the different family members at the same time and prevent this?
Be sure to consult with your Carrell Blanton Ferris and Associates, PLLC attorney who will be well versed in estate planning for blended families.
Beneficiary designations on retirement accounts, insurance, financial accounts, real estate and cars are critical in blended family estate planning. You must correctly align your payable on death or transfer on death assets with the best legal protection possible for your beneficiaries. These are assets where you have named a direct beneficiary who will receive a designated portion of a particular asset without court intervention.
Unfortunately, a payable on death or transfer on death designation does not care if your beneficiary is a minor or an incapacitated individual with government benefits which is why many people use Revocable Living trusts as a named beneficiary of these payable or transfer on death accounts.
Revocable Living Trusts can provide great peace of mind in blended family estate planning. Not only can you create married separate trusts to provide for your surviving spouse while they are living and still protect your children, but you can use independent third party trustees to manage the assets in the best interests of all parties. Keep the peace even when you are not there to be the immediate referee.
What is the outcome of carefully crafted Estate Planning for Blended Families? PEACE OF MIND for you, your new spouse and all sets of children. We look forward to meeting all of you to help create legal protection for your blended family.