Estate planning for blended families can get confusing and sometimes become a roadblock or a reason why people procrastinate having a plan at all. By building a concrete estate plan for both your biological and through marriage family members, you can help avoid probate court and legal issues down the road.
First, what is a blended family? A blended family often refers to married couples with children from previous marriages or relationships. Blended families can include families with step children or half siblings, or extended family members who live in the same home or more. These types of family structures are becoming more and more common with many estimates that over 16 percent of children in the U.S. live in a blended family configuration.
Second, the best option for blended families is to take each family relationship into account. With blended families, there can be concerns about inheritance tax, who to name as the fiduciary and overall issues of fairness. For example, many people want to provide for a surviving spouse if they need it, but ultimately want their assets to pass to their children. This can be accomplished by specific language in either a family trust or martial trust. What if you own the home, but you want your surviving spouse to have the right to occupy the property if you predecease them? This can be done by creating a right to occupy if real estate is held in trust so the surviving spouse can reside in the property for a set amount of time or indefinitely. However, just creating this structure isn’t enough. You want to think about who is responsible for the upkeep of the house, who is paying for the insurance, property taxes, and so forth. These are the details that an experienced estate planning attorney can help you work through.
Third, it is important to consider a prenuptial (or postnuptial) agreement for you and your spouse if your goal is to keep the majority of your assets separate. This is a great way to plan ahead and ensure you and your new spouse are on the same page from the beginning. It is also important to note that Maryland has what is called an augmented estate. This means that without a valid pre or postnuptial agreement, a surviving spouse may elect against the deceased spouse’s estate unless there is a valid waiver done prior to incapacity.
Fourth, who do you want to act on your behalf if you are incapacitated? You may not want to leave your assets to a spouse but maybe you want them to make medical decisions or manage your finances if you are incapacitated. A comprehensive estate plan will address both how your assets are distributed at death and who is going to manage your assets and medical decisions during life if you are unable to do so yourself.
Lastly, you want to always remember to revisit your estate plan every 3 to 5 years. While life may seem to get in the way of your reviews, it is crucial to make sure that your estate plan accounts for all new members of a blended family as time goes on. Contact us at Sinclair Prosser Gasior to discuss your estate planning needs today.