It seems like it’s the new normal — blended families — are more commonplace today than ever before; and with them comes a variety of considerations in estate planning that we’ll explore in this article.

WHY DOES BLENDED FAMILY ESTATE PLANNING MATTER?

During the second half of the 20th century, the “typical” family comprised of a husband, wife, and 2.3 children. Prior to the 20th century multiple generations of a family more commonly lived in one household, and lower life expectancies meant multiple marriages were more common. Improvements in healthcare brought the average life expectancy up dramatically, and the post-war industrial boom bolstered the economy to such an extent that the 1960s and 1970s saw the nuclear family become the de facto standard. Evolution of social and cultural norms since the 1970s has led to diverse family structures; greater acceptance of divorce and remarriage, same-sex relationships, and unmarried cohabitation have diminished the expectation of nuclear families. Adults are more commonly stepparents in a second (or more) marriage. Widows and widowers often remarry, even later in life. In fact, diverse family structures have become such a norm that less than half of American children are raised in the “typical” family structure.

WHAT DO I NEED TO KNOW ABOUT ESTATE PLANNING FOR MY MODERN FAMILY?

Typical estate planning does not work for the modern family. Traditionally, when a parent dies the living parent inherits everything, and later the assets are inherited by the children. However, the new landscape of diverse family structures complicates what was once a simple process. A modern scenario would see the surviving spouse remarry.

Often the remarried spouse will go on to share assets with their new partner; meaning that, in the event the remarried spouse dies first, their surviving spouse would inherit everything instead of their children. In the event that marital assets are not combined, the new spouse would still have claim to up to 30% of all assets under “elective share” laws. Another complication is the dynamic of step-children. Say a person was a step-parent from when the child was young and raised that child as their own – if and when the step-parent passes, the child would not be entitled to their assets.

ARE THERE ALTERNATIVES TO THE STANDARD LAW?

Unlike most countries, American inheritance laws allow people to leave their assets to anyone they choose. To do so, a person simply needs to create an estate plan detailing which assets are bequeathed to whom. There are only two main restrictions on inheritance laws – disinheriting a spouse or minor child. Certain legal documentation (such as a pre-nuptial agreement, post-nuptial agreement, or other like structures) allow the spouses to restrict any claims to assets; however they have to be agreed upon in writing beforehand.  When estate planning, it’s important to remember that every family is unique. What works for one family may not work for another. Unforeseen circumstances can derail even the best laid plans, but proper estate planning can better protect families. Another caution is that people may not do what is expected of them. Money can change people’s behavior, or they may not have the same mental capacity at that time as when they signed the documents. Planning for scenarios that may seem implausible gives people more control over their assets, even after they pass.

WHAT CONSIDERATIONS SHOULD BE TAKEN WHEN PLANNING AN ESTATE?

1. In the event that a person passes while their biological children are still under 18, who would take care of them?
2. What happens if the first-choice guardian is unable or unwilling to take the minor children?
3. It is the parent’s responsibility to financially provide for minor children, so who will manage the money for them until they are old enough to?
4. The best dynamic is to have one parent tending to household and childcare needs, while the other manages the finances. How should money be allocated and budgeted?
5. How old should the children be before they control their inheritance?
6. Who is considered to be their children?
7. Are there any stepchildren or non-biological to take into consideration?
8. If a person is married, what should their spouse inherit?
9. For minor children, do plans for their inheritance change after they turn 18?
10. Are there any extended family members, friends, or ex-partners that would inherit assets?
11. If the adult children are married, what should their spouse be entitled to, if anything?
12. If the adult children are successful enough, would the money instead go to the grandchildren? Would they all be given an equal share? How much of a share would each get?
13. Are there any step- or non-biological grandchildren to consider?

WE’RE HAPPY TO HELP

Diverse families have diverse needs when it comes to estate planning. For those in need of guidance in their estate planning, our attorneys are available for consultation to discuss each family’s best options.