Blended families: A recipe for probate battles

A blended family is one where a spouse (or both) have at least one child from a previous marriage or relationship. This dynamic has become commonplace. In fact, one in six children nationwide live in a household with a step-parent, step-sibling, or half-sibling. And about 65 percent of remarriages create a blended family.

The most-famous blended family is a television one—the Brady Bunch. When Mike and Carol Brady married, each brought three children into the marriage. Mike had three boys and Carol three girls.

Fortunately, Mike and Carol managed to raise the kids as one big, happy family. But let’s fast-forward a few decades: What would have happened if Mike died before Carol?

If Mike died intestate (meaning that he died without a will), then his property would go to Carol consistent with their locale’s intestacy laws. In other words, Carol would get most, if not all, of Mike’s stuff.

Now let’s say that Carol dies a few years later without creating a will or getting married again. All of her stuff goes to her daughters. Mike’s sons, on the other hand, get nothing.

And if Carol married, and then died intestate, the result would be even worse. Carol’s new husband would get the lion’s share of Mike’s property. And, again, Mike’s sons would get nothing.

Now let’s play the scenario out again, assuming that Mike, Carol, and the kids were not one, big happy family. When Mike dies, Carol can stop Mike’s sons from visiting the family home. She can block them from receiving any sentimental mementos. And, of course, she can funnel all of Mike’s wealth away from his biological sons and to her daughters, even though Mike was not their biological father.

As we can see, blended families pose troubling issues, whether or not the blended family likes each other. Fortunately, by being proactive, these troubles can be banished before storm clouds have a chance to gather.

Step one: Act now. Don’t wait until you get sick or hurt. Make a plan years before you think you will need it.

Step two: Tell your family the plan, preferably in person and again in writing. Disclosure early can cure many ills later.

Step three: Regularly update your plan to keep up with current events. For example, if one of your kids takes care of you while others don’t, you may want that kid to receive more since they did more.

Step four: Notify your family about the updates, preferably in person and again in writing.

Now that we’ve covered the steps we should take, let’s circle back to the planning stage with four tips to protect both your assets and your family.

First, a simple will is normally too simple to address the complexities of a blended family. Don’t create a will that simply says your assets will pass to your spouse—unless you want your spouse to have the power to cut off your biological kids after you are gone.

Second, think hard about creating a trust rather than a will. The advantage here is that a trust is a vastly more flexible tool than a will for passing your wealth. For example, unlike a will, a properly drafted trust can protect your kids’ access to your assets if your spouse gets remarried. Similarly, unlike a will, a trust can be written to leave assets for your spouse during their lifetime and then, after they pass, transferring what is left over to your kids.

Third, if you create a trust, pick a trustworthy and sophisticated trustee. This person’s job will include investing the trust’s assets and then distributing them to the trust’s beneficiaries. These roles, in turn, create a natural conflict between your spouse and kids. That’s because your spouse benefits from the trustee distributing money during the spouse’s lifetime while the kids benefit from the trust growing rather than spending the trust assets. As a result, the trustee needs to know not only how to manage the trust funds, they also need to understand how to swim through potentially tense family drama.

Fourth, consider putting some of your assets into accounts that will automatically transfer to your kids when you die, so that they are taken care of regardless of what your spouse does. For instance, you can go to your bank, fill out a form designating your beneficiary and, voila, the designated beneficiary will receive that account when you pass. These accounts (which are known as pay-on-death accounts, informal trusts, or Totten trusts) have several advantages: They’re free, easy to create, and simple to use for your designated beneficiary.

But if you set up one of these accounts, remember to regularly review it. It would be a bummer if you originally selected one of your kids, had a falling out with them, but accidentally left them as the designated beneficiary. In that case, it doesn’t matter that you did not want them to receive anything. They would still get the account because you didn’t update the beneficiary.

In sum, while blended families have become common, they are by no means easy. Indeed, they provide fertile ground for family drama. But with some thoughtful planning, this rich soil need not blossom into conflict. To avoid your death becoming the spark that sets your family ablaze, speak with an experienced estate-planning attorney.

This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.