The Unique Challenges of Estate Planning in Blended Families

How can I safeguard my child’s inheritance from my current spouse?

Unlike the couple whose first marriage stood the test of time and who are parents together exclusively to the same children, those who have multiple marriages and/or blended families sometimes face unique estate planning issues.

Each spouse generally enters the subsequent marriage with assets of their own, some or all of which may remain separate after the union. While the couple may have children together, one or both spouses often already have children from an earlier marriage. In blended families, there may also be strained relationships between the prior children and the current spouse.

It’s not unusual for parents to want to distribute property after death to their children who are not biologically related to their current spouse. It’s also common to want to (or to feel pressure to) designate the current spouse as the sole beneficiary (especially if the children are minors) on the assumption that s/he will “do the right thing” by your children.

Bad move.

If you designate someone as a beneficiary in your will, the property specified will be distributed to that person and they have no obligation to redistribute it to your children or anyone else.  Choosing your current spouse to inherit everything because s/he promised to then leave that property to your children or promised to use the money to benefit your children puts the power to give your children nothing at all in that hands of your current spouse—or the person they may ultimately remarry. Legal protection, not emotion and promises, is the key to effective estate planning.

The better solution is to consider either a testamentary trust (which is part of a will) or a living trust (which is set up during your life). When a trust is created or takes effect and assets are placed in the trust for the benefit of a named beneficiary (such as a child), the trustee(s) who was chosen by the creator will be in charge of distributing those assets to the specified beneficiary in accordance with the terms of the trust. A trustee(s) has a fiduciary duty to safeguard, invest, and/or distribute the property for the benefit of the beneficiary in accordance with the wishes of the creator and as specified in the trust language. Naming trustees who– unlike beneficiaries—may have to answer to the court for their actions, dramatically reduces the risk of the trustee(s) misappropriating or absconding with the money you left for your child or anyone else.

Recently, a California woman with a child from a prior marriage and one from her current marriage named her current husband and her sister as beneficiaries of her estate figuring her sister would use the assets to take care of her older child and her husband would us them to take care of their younger child. This didn’t protect either child as the sister and the husband could keep and use the estate’s assets however they wished. By setting up separate trusts for the two children, and naming separate trustees (her sister and current husband), the assets would be safeguarded for the benefit of the two children and would be managed by the people she trusts most to care for each one.

Many factors must be considered, tax-related and otherwise, when deciding whether a will or living trust is the best option in any particular situation, so it’s important to consult a law firm that specializes in Estate Planning law.

If you need an Estate Planning attorney to help you plan for the distribution of your assets after you’re gone, or if you have a will or trust and would like to review or revise it, Carico Johnson Toomey LLP is conveniently located right in the South Bay area of California and offers years of experience and expertise. Get the peace of mind that comes from securing your family’s future. Call (310) 545-0010.

 

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