The recent death of my teenage heartthrob David Cassidy got me thinking about Friday nights in the 1970’s when The Brady Bunch and The Partridge Family were must-see-TV.  The Brady Bunch were and may still be TV’s most famous blended family.  Mike and Carol Brady met, fell in love, married, and combined their individual families of three children apiece into one harmonious blended family of 6 children which encountered no problem that could not be resolved in a half-hour episode.

In the estate planning context, blended families present some planning challenges.  The parties may have a prenuptial agreement by which they have already agreed upon how assets will be distributed at death, or they may have not given the issue any thought at all.  Here are five issues that deserve consideration when planning for your blended family:

1. Division of Assets at Death. Two threshold questions are how do you and your spouse own your assets and to whom do you wish to leave those assets at death?  For example, if you married later in life after your children were grown and out of the house, you may own your assets individually and each intend to leave your individually owned assets to your respective children at death.  If you married when your children were very young and raised all of your children together, you may have long ago combined your assets and may intend that your assets be divided equally among all of the children.   If you intend that your assets pass not only to your biological children but also to the children of your spouse, this must be accomplished by appropriate legal documents.  The intestate laws that govern the distribution of estate assets in the absence of a Will do not provide for assets to pass to children that are not legal descendants (the biological or adopted children of the deceased).  Those documents can also allocate assets unequally to children and step-children if that is your intention.

 

2. Planning for the Surviving Spouse. If you want to leave assets to your own children at death, will the survivor of you have sufficient assets to live on? A plan that leaves assets to your spouse with the understanding that she will leave any remaining assets to your children at her death can be a recipe for disaster.  The surviving spouse can change her estate plan or beneficiary designations after the first spouse dies to leave the assets in whatever manner she chooses.  Even if the surviving spouse honors the agreement, liability or long-term illness could cause inherited assets to be lost.  In this situation, a trust can be an appropriate arrangement to ensure that the surviving spouse has the benefit of income or assets during the surviving spouse’s lifetime, and that any remaining assets pass directly to the children of the first spouse to die at the surviving spouse’s death.

But do you want your children to have to wait until their step-parent dies in order to receive their inheritance? What if there is a significant age difference between you and your spouse?  These are all planning questions that need to be addressed in the context of each particular family’s situation.  The best approach may be to split the difference, leaving some assets to children directly at the first spouse’s death, and other assets to the spouse or in trust for the spouse.  This can be an especially important issue when planning for the distribution of retirement accounts in such a situation, factoring in the income tax implications of the various planning choices.

 

3. What to do with the Home? A blended family may live in a home that is owned by one spouse, or by both spouses who may have contributed equally or unequally to its purchase and subsequent carrying costs.  If the home is owned by one spouse, an important planning consideration is where the surviving spouse will live when the owner-spouse dies, especially if the owner-spouse wants the home or its value to pass on to his children.  A well-structured estate plan can allow the surviving spouse to continue to reside in the home for her lifetime, paying carrying costs in lieu of rent, and then pass the home (or the proceeds from its sale) to the owner’s children.  If both spouses own the home, similar arrangements can be made, with the proceeds divided between both spouses’ children at the death of the surviving spouse, or when the home is sold.

 

4. Choosing Fiduciaries. Your legal documents may carefully spell out your intentions, but who will ensure those documents are administered properly and fairly? Choosing a fiduciary all members of a blended family feel comfortable with can sometimes be a challenge.  This may be best addressed by choosing a third party or a professional or corporate fiduciary.  Or there may be a family member who all the other family members are comfortable filling that role.  In other families, two children (one from each side of the family) acting as co-fiduciaries is a good solution.

 

5. Planning for Long-Term Care. Paying for long-term care can be challenging in a blended family where spouses have maintained separate assets and do not intend that one spouse should be responsible for the care costs of the other spouse.  Unfortunately, public benefit programs do not make exceptions for these circumstances, nor do they respect the terms of a prenuptial agreement the parties may have entered into.  Under the rules of those programs all of the assets of both spouses are “available” to pay for the care of either spouse.  If this is not the parties’ intention, consideration should be given to other planning strategies that will not leave one spouse responsible for the other’s care costs, leaving no inheritance for his or her children.

Estate planning for a blended family is not as easy as it looks on TV.  Each family and its dynamics are different, and there is not one correct approach.  However, it is important to take the time to plan thoughtfully for your family, to ensure that the surviving spouse is provided for, and the harmony your blended family has worked hard to achieve continues long after you are gone.

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

December 2017

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