Estate Planning For Blended Families

by: R. Kurtz "Kurt" Holloway

Estate planning for a couple who are parents of the same children is often simple and straight-forward. When a couple has stepchildren, the planning for this blended family requires more thought. 

The spouses may have come into this new marriage with different amounts of assets. For instance, if a wife  has more assets at the time of the marriage than her new husband she may wish to assure that her children benefit from her greater wealth at her death while still providing for her husband and stepchildren.  Likewise the husband will want to be sure that his children inherit a fair portion. Can each assure that his or her estate plan will be carried out no matter who dies first?

In Pennsylvania, when one spouse dies the surviving spouse has the choice of accepting the amount of his deceased spouse’s estate provided for in her will or he can elect to get a one-third share of any property over which the  deceased spouse had any ownership rights at her death. The law also provides exceptions and identifies property and death benefits the surviving spouse would need to “put back in the pot” before calculating the elective share. The calculations can be complicated.  How can a couple avoid this type of uncertainty?

These are just some examples of situations that couples with blended families face. There are ways that a couple’s estate plan can be assured to be carried out but first they need to have a plan. They need to discuss the results each would like to achieve.  Once they have a plan it’s time to talk to a lawyer to find out how to carry it out.

The plan needs to be documented. Creating wills is critical. Just as important is establishing beneficiary designations for assets not covered by the wills. But these steps alone may not be enough to assure that one party does not make unilateral changes to the joint plan in the future.

Relationships often change over time.  Also, factors such financial management skills, length of the marriage and the amount and type of assets can come into play. A couple may trust each other’s sincerity to honor the joint plan but trust may not prevent outside forces and a subsequent marriage from causing changes to the joint plan. To help guarantee a joint estate plan is carried out throughout the lifetime of both spouses, written agreements and trusts are important tools to consider.

A written estate planning agreement between spouses can be created either before or during the marriage. It can fully document the plan and assure the plan gets carried out by creating certain enforceable, contractual rights. The agreement can also provide that each spouse gives up other rights such as the right to elect against the will of his or her spouse.

Creating a trust works well for managing real estate and income producing assets intended to be held for a number of years. A trust can also be written to manage and protect assets for vulnerable  beneficiaries. An important part of such a trust is naming a trustee who understands the estate plan and is committed to managing the trust with the intent of carrying out the plan.

In Summary, estate planning for blended families deserves special attention.

Kurt Holloway

About the author
Kurt Holloway

R. Kurtz “Kurt" Holloway was admitted to practice in 1977 in Pennsylvania and later in the Eastern District Federal Court of Pennsylvania. Mr. Holloway’s areas of concentration are Estate Planning, Estate Administration, Elder and Disability Planning, Real Estate Law, Zoning and Land Development, Business Law and Municipal Law.

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