Blended Families – How It Affects Planning

If you found that your first marriage didn’t end in a “happily ever after” and you have another chance at it, hopefully you’re a little bit wiser. Second marriages and blended families present their own set of issues. A blended family is any family where the children in the home are not the children of the two parents also living in the home (commonly known as step-children). Any time you are faced with multiple potentially conflicting family groups, you want to make sure you are handling each group as you would like. Having a thoughtful plan in place is the best way to protect your family from whatever may come.

Not every blended family is going to look like the Brady Bunch. There are numerous aspects of forming a new family that can create challenges.  Everything from the number and age of the Brady Bunchchildren to the attitudes and actions of the other biological parents as well as the respective financial statuses of the new couple.  The new couple will have separate property and may or may not be planning to have community property.  The new couple will need to determine how they want to provide for each other, their own children, their step children and any children they have together.  While taking care of your spouse and the children may be a top priority, implementation can be rocky. Whether it’s sibling rivalry, financial difficulty or even the actual estate planning there are many resources out there to help you work through these difficulties. The following is a guide to help you take on some of the issues associated with planning for your new family.

Estate planning is a road map for what happens if you are incapacitated or after you have passed away. An estate plan should include at least these four key documents: will, medical power of attorney, durable (financial) power of attorney, directive to physicians (living will). However, there are many other documents that can address the specific needs of your situation.

Estate planning for all families begins with the same foundational steps, but if you are a blended family, additional steps may need to be taken to ensure all of your loved ones are protected and your wishes are followed.

Communication

Every good plan starts with communication. The first step is to have an open and honest conversation with your new spouse about your current finances, goals for the future and how you see your assets being distributed. Sometimes this conversation is a time to discuss what legal documents include your ex. You’ve combined your life with someone new and need to make sure all documents reflect this. Bring these legal documents when discussing your options.  Recognize this should not be a single conversation but a dialogue that will continue throughout your life.  Your goals may change over time based on the duration of the marriage, the age of the children and the nature of the assets to be distributed.

It is essential to think through as many scenarios as possible, no matter how difficult. Your wishes may change based on who passes away first. These conversations can be emotionally charged, so it’s important to approach it with an open mind and as stress-free an environment as possible. Ultimately, these talks will be beneficial in the long run. Consulting with an estate planning attorney along the way to provide education, insight, recommendations and options can help you address the potentially conflicting goals.

Wills

A will is important for everyone, but they are critical for a blended family and simplifies the probate process for your beneficiaries. A properly executed Will assures that your property passes to the loved ones of your choosing.  It provides detailed instruction on how to distribute your assets upon your passing, along with other important issues. Sometimes people forget to change their will when they get divorced and remarry. Joining together a new family is an excellent time to revisit the issue because you may want to treat your minor children with your current spouse differently than your adult children from a previous relationship. You may also want to include step-children, who would not be included under the law.

One of the biggest concerns in planning for a second marriage is making sure your assets ultimately end up with your chosen beneficiaries. Assets can be tangible or intangible and the value can be financial or emotional. This can include your house, car, jewelry, personal property, investments, insurance, retirement account, family photos, heirlooms and many other things.  You may also have both separate and community property which is treated differently under the law.

Don’t underestimate the usefulness of a well-thought out list. If there are specific items you’d like to leave your children, start jotting them down. You can later add them to your final plan. Not being specific about your wishes is a common problem but this mistake can be magnified in a blended family. You don’t want your children to inherit unnecessary stress or a legal battle after your passing. The same is true with your spouse. You may have community property, you may have separate property, but you want to make sure things happen according to your wishes. Not what the state statute says should happen.

These are some of the reasons why a will is critical in a blended family. It allows you to create a legacy that treats every member of the family exactly as you wish.

While Texas recognizes handwritten Wills, an attorney prepared Will should ensure your document meets the state requirements.  It will also help you to understand the impact of the decisions you are making.

Trusts

If you want to provide for both your spouse and your children should something happen to you, then outright gifts of property may not be the best solution. Many blended families use trusts to provide for a spouse, while simultaneously ensuring their children end up with property as well.

The use trusts can be an important estate planning technique for blended families. A revocable trust is established during a person’s lifetime and the trust document names a trustee and one or more successor trustees to manage the assets that are transferred to the trust.  An individual might name themselves as the trustee and their partner as the successor trustee.  If both spouses contribute assets to the trust, then they may choose to be co-trustees.  In a blended family, it is important to document what should happen when each spouse passes away and the terms under which the trust should be terminated.

Another viable option is to create a testamentary trust (or trusts). The testamentary trust could provide for the surviving spouse during his or her lifetime and, upon the death of the surviving spouse, the remaining trust assets could pass equally to the children or step-children of the deceased spouse.

Powers of Attorney

A Power of Attorney is a document that gives a trusted individual the ability to make decisions for you. In Texas, that can be a Durable (Financial) Power of Attorney or a Medical Power of Attorney.  Each document will perform exactly as the title suggests. While Texas gives very broad authority to your spouse if you are unable to act, there are some exceptions and your spouse may not be the best person to take action. Additionally, if something should happen to both you and your spouse, you may need someone else to take over the decision making. For example, you and your spouse go out to dinner and get in an auto accident and you are both hospitalized. Who is going to pay the bills or make medical decisions for you until one of you recovers enough to resume that? So often for married couples, it is that alternate agent that is the important decision.

Financial Power of Attorney gives you the opportunity to name a trusted individual to manage your financial affairs and legal decisions if you are not capable of doing so during your life. When you divorce, your Power of Attorney naming the previous spouse is invalid but it should be revoked to prevent a bad actor from taking illegal action using the previous Power of Attorney.

Medical Power of Attorney is much like Financial Power of Attorney in that you name someone you trust to make decisions about your health care if you are no longer capable yourself. Discuss your feelings with your spouse and alternate decision makers regarding end-of-life care, organ donation and burial arrangements. You can’t predict the future. Having a Medical Power of Attorney in place is especially helpful for medical professionals in the event of an emergency.

If you want to name your adult children, step-children or siblings to act on your behalf, you need to document your wishes. Especially if you want to name your step-children as Agent in a Power of Attorney. The state will not recognize them otherwise. You should have current Powers of Attorney in your estate plan and they should be consistent with your state of residence.

Taking Care of Minor Children

If you have minor children and your former spouse has been removed as a legal guardian or is no longer living, it is important to have a plan for their future should something happen to you.

Minors are not legally able to control assets and a guardian may have to be appointed by the court to manage any assets until the minor turns 18. There are ways to avoid court intervention while allowing your child to benefit from the legacy you will leave them. An attorney can explain your options and help determine your best strategy.

Determining who to name as your child’s guardian is an enormous decision that is not to be taken lightly. Take the time now to determine who is the right fit for you and most importantly, your child. Then take steps to make it official with a will or appointment of guardian for a child. This is especially important in a blended family. Once a court has determined a guardian is needed, the statutes determine in what order people may be considered for appointment. If the ward is a minor, the order of priority is: parents, the person (s) designated by the last surviving parent, grandparents, next of kin and finally, a non-relative. If you want your new spouse to be that person, it especially important to document this or else the court may not appoint them.

If possible, it is important to choose someone who shares parenting philosophies, spiritual values and someone who can offer a supportive and stable transition during what is obviously a traumatic time for your child. This could be your new spouse. If you were to unexpectedly pass, you may want your child to remain in the home with their step-parent. It’s not only okay but also necessary to reassess periodically. The person that was the right guardian when your child was a toddler may not be the right person 10 years down the line. You may have been single for years and named someone else. But now that you’ve remarried, it could be time to change your legal documents to reflect that.

Personal Information and Contacts

You and your new spouse may still be learning about each other, and that may include details about financial assets. Now is the time to share information regarding your 401k and bank account information.  It could also be time to make changes or transfer those accounts. It will be so helpful for your grieving spouse and family to not have to play detective after your death.

Moreover, your new spouse may not know all of your family and old friends. Providing names, telephone numbers and email addresses for these people so that they can be notified if something happens to you will help connect your spouse with your past.

Every blended family is different and each presents its own set of challenges, both legal and personal, but a trusted attorney can help guide you through the process and help you achieve your goals.

Hire an Attorney

Every state has different requirements regarding who will have the right to make decisions if you should become incapacitated or pass away. It’s important to talk to an attorney to develop a plan that meets the needs of your unique family situation. You don’t want to make promises to loved-ones and then have a plan that leaves them high-and-dry.

Remember, things may not go as planned. It’s important to consider every possible outcome when putting together your plan. Find an estate planning attorney in your state with experience in blended families to guide you through this process. Remember, until you get your plan finalized, there’s no way of assuring your wishes will be respected.

For a full list of services that our firm provides, visit our website at http://irving-law.com/services/ or call us at 972-292-7199.