Call Us Today To Schedule An Initial Consultation At No Charge (608) 886-8483

Waterman Law LLC - Madison, WI

Call Us Today To Schedule An Initial Consultation At No Charge (608) 886-8483

Waterman Law LLC - Madison, WI

Estate Planning For Blended Families

The following article will cover:

  • What is a blended family and why is blended family estate planning important?
  • Key challenges unique to estate planning for blended families.
  • Different strategies or tools available for blended family estate planning.

What Is A Blended Family? What Is Blended Family Estate Planning And Why Is It Important?

Estate Planning For Blended Families

When a couple who each bring children from previous relationships decide to become a family, they form what we call a “blended family.” A blended family can also be formed when just one partner introduces children from a previous relationship. The key factor here is the presence of children from previous relationships.

For estate planning, the significance of a blended family lies in its potential implications for inheritance. Should one parent—either the biological one or the stepparent—pass away without a will, their partner would in most cases inherit a significant portion of their estate. This individual could then choose to exclude the deceased partner’s children from their will, or change the terms of a revocable trust. An unfortunate possibility that does occur. It’s crucial for blended families to consider estate planning to prepare for such circumstances.

What Are The Key Challenges Unique To Estate Planning For Blended Families?

Generally, the first concern in estate planning for blended families is the disposition of assets. Decisions need to be made about how assets should be distributed among the children. For example, if one parent has three children and the other has two, should each child receive an equal one-fifth of the estate or should the distribution favor the children of the parent with fewer offspring? Such questions need to be addressed before it’s too late, and decisions are made without the parents’ input.

What Are The Different Strategies Or Tools Available For Blended Family Estate Planning?

A marital property agreement is a crucial tool for blended family estate planning. This agreement is a contract between the two married individuals that provides for accepting or opting out of the State’s scheme for distributing the assets of a person who dies without a will. A marital property agreement can be used to change the border lines between what the spouses own together as a couple and what they own separately. For example, two spouses can agree that the earnings of each will remain that person’s separate property, rather than community property as Wisconsin’s marital property law provides.

A will is another tool that allows spouses to each make their own plan for passing their wealth, but the power of a will is limited: a married person can only bequeath half of the marital property.

A revocable trust is often used as a will substitute, and this has the advantage of avoiding the expense and extra time required to go through probate. If each spouse has a will that directs everything to the trust, the trust typically provides a plan for distributions to all of the children upon the passing of the second spouse to pass away.

Wisconsin law provides specific rules for inheritance, including provisions for the natural children of a person who has remarried. Even if both spouses in a blended family choose to follow Wisconsin’s default rules, they benefit from understanding their options and knowing they have made the best choice for their family.

What Are The Potential Conflicts That May Arise In A Blended Family Estate Plan? How Can They Be Addressed Or Minimized?

Conflicts within a blended family estate plan are relatively rare during the planning stages, as the couple usually agrees on the basics. However, conflicts sometimes stem from family members who believe they are entitled to a larger share of the estate after a parent’s passing. Divorce situations can also present potential conflicts. In such cases, a marital property agreement may or may not be relied upon because it may contain a clause stating it is void in the event of a divorce. In this situation the applicable state law will control.

How Often Should A Blended Family Review And Update Their Estate Planning To Ensure It Reflects Their Current Circumstance And Wishes?

As a rule of thumb, every five to seven years is the recommended timeframe for revisiting your estate plan. However, this frequency is dependent on changes in your circumstances. If your circumstances remain stable, less frequent revisions may suffice.

Changes such a death in the family, an inheritance, selling the family home, a job change or relocation may necessitate more frequent reviews. Major life changes often mean designating different people for key roles, like the agents for power of attorney for finances or healthcare. It is essential to have someone you trust and who is nearby to fulfill these roles. As well, life changes may prompt a review of the estate plan’s asset distributions.

What Should Individuals Consider When Selecting Guardians Or Trustees For Their Minor Children In A Blended Family?

The choice of guardians or trustees for minor children should be individuals with whom the parents are comfortable and who have a strong connection with the children. While the court makes the final decision, parents can indicate their preferred guardians in a will or power of attorney for healthcare. The court typically respects these suggestions unless there is a compelling reason not to. For more information on Estate Planning For Blended Families, an initial consultation is your next best step.

Waterman Law LLC - Madison, WI

Call Us Today To Schedule
An Initial Consultation At
No Charge: (608) 886-8483

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