Blended families are very common today in modern society. Many Americans remarry and will either have children from a prior relationship or marriage or have children from the prior relationship or marriage as well as children with their new partner. These scenarios create unique issues when it comes to estate planning and will require that you work with an experienced estate planning attorney.
You may have heard the term “blended family” before but may not understand entirely what that means or if your family qualifies as one. A blended family occurs when you have children from a prior relationship or marriage and then you marry or remarry. You now may have additional children with your spouse and want to provide for both children from the prior marriage, children from the present marriage as well as your current spouse. The typical estate planning approach may not work with this situation since blended families create unique issues that are best addressed by an experienced estate planning attorney. Let's take a closer look as some of the issues that blended families tend to face.
You can disinherit your spouse, but it will not be an easy task. For other family members, disinheriting is as simple as putting the proper language in your estate plan (and titling your assets properly) but there are protections in place for your spouse. In the majority of states, you cannot disinherit your spouse unless your spouse agrees to receive nothing from your estate by one of the following:
- Prenuptial agreement
- Postnuptial agreement
- Waiver of homestead rights
- Waiver of elective share
It's important to be cognizant that the spousal disinheritance laws vary greatly from state to state. Spousal rights are referred to as the elective share laws (or community property laws in some states) and will determine just how little you may leave to your spouse.
Each state has defined its own laws on the spouse's right to inherit, basing these laws on one or more of the following:
- Length of the marriage
- If children were born during the marriage and if these children are minors
- The value of the assets included in a deceased spouse's probate estate
- The total value of a deceased spouse's estate, including non-probate assets and probate assets
If you attempt to disinherit your spouse in a will or trust or even just leave them too little, then the elective share laws of your state will control (this is assuming you do not have a prenuptial or postnuptial agreement in place, or a valid waiver). The elective share will give the surviving spouse the ability to elect to receive a percentage of your estate in lieu of what your will might leave them. To help illustrate how this works, let's use Florida law as an example. Let's assume you're planning in advance by working with an estate planning attorney and wish to disinherit your spouse in order to provide for children. Florida's elective share law states that you can only reduce your spouse's share to 30% and then you may leave the remaining 70% to your children however you wish. Further, there are restrictions on how you can devise your homestead property at your death as well. If you simply wish to leave half (50%) to your spouse and the remaining half to your children then that is permissible, since the 30% to your spouse has been satisfied. One final note to consider: Do not think you can simply put your children as beneficiary on your accounts to avoid meeting this 30% requirement in Florida (or other states' elective share laws). At your passing, without the proper documents in place, that elective share must be satisfied. The best way to ensure your goals are met is to work with an experienced estate planning attorney to discuss your options.
Some assets that may be used to satisfy the elective share include:
- Assets in the decedent's probate estate
- Property passing by survivorship (some exceptions apply)
- Revocable transfers/revocable trust assets
- Retirement plans (both qualified and nonqualified)
- Life insurance (amount will be limited by the cash value)
Some assets that cannot be used to satisfy the elective share include:
- Property that was transferred with the surviving spouse's written consent
- Life insurance (where the death benefit exceeds the cash value immediately before your death)
- Protected homestead of the decedent
- Decedent's one-half interest in community property
Unfortunately, this isn't a yes or no answer. It will first depend on what your goal is, and that will determine the best strategy for you. However, if you have a blended family, then it's highly likely that you will need at least a Last Will and Testament. Remember, a will cannot disinherit your spouse for you, but it can reduce their share of your probate estate. If you wish to simply reduce the share of inheritance your spouse is to receive, an estate planning attorney in your state can draft your will to help accomplish this goal (as well as help you properly retitle your assets). Without any estate planning done, then you are allowing your state's intestacy laws to determine how your assets will be divided at your death. Most states will leave everything to your spouse, which means children from a prior marriage could end up receiving nothing. It's crucial to first determine your goal and then work with an estate planning attorney to ensure that no one is unintentionally disinherited.
Using a will as your main planning device will require you to spend time addressing the titling and beneficiary designations on all of your assets, including your real property. The major downside of a will is that it will be admitted to probate after you pass away. Probate is the court process of reviewing your will to determine its validity and then, if there are probate assets, distributing those assets in accordance with your will.
Here are the top three reasons most individuals wish to avoid the probate process:
- Time consuming
- Public record
A probate case can last anywhere from three months to 12 months. This means the assets are tied up in court instead of being distributed to your loved ones.
Hiring an attorney for a probate case will be costly and the fees are paid from the estate assets. This means that your beneficiaries are now receiving less of an inheritance.
The probate process is a public record so anyone at any time can look up your case and see how your estate was handled.
Despite this drawback, a will is still a great planning device and is important if you want control over how your assets will be distributed. While some families may be fine with their spouse receiving everything at their death, blended families tend to want their children from a previous relationship to receive something. The will is one tool that can accomplish this, but let's take a look at another popular and much more efficient planning device.
A revocable trust tends to be the more popular planning tool simply because it allows for easy probate avoidance, the ability to plan for your own incapacity as well as more control over asset distribution after your death.
With blended families, the trust may be the better option since certain trusts allow for your surviving spouse to enjoy the assets for their lifetime only. At their death, the remaining property in trust will then pass to either the children from your prior relationship or any beneficiaries you should choose. You may still want to consider leaving additional asset outright to your other intended beneficiaries since the surviving spouse may use up most of the assets during their lifetime (leaving future beneficiaries with less of an inheritance). An estate planning attorney can tailor this type of trust to meet your specific goals.
Yes! Titling is an important part of estate planning. In fact, titling of an asset will override your estate plan. One mistake that people tend to make is leaving a large percentage to their children from a previous marriage but having all of their assets titled with the surviving spouse as the primary beneficiary. If not careful, a person who does this may inadvertently disinherit their children. Lastly, even though these designations control before your estate planning documents do, they will not provide a way to avoid the elective share law. Instead, you should consider working with an estate planning attorney to discuss how each asset should be titled in order to work with your estate plan and achieve your goals.
We all hope that our spouse will honor our wishes after we are gone but the truth is, if it's not in writing you can't guarantee anything actually will be honored. The best thing you can do for your spouse and for your children (both from your current marriage and those from a prior relationship) is to put your wishes in writing. Take some time to consider how you would like for your assets to be distributed and then schedule an appointment to work with a knowledgeable estate planner. Together you can work toward putting a plan in place that that best suits your family's needs.