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Blended Families: Impact on Estate Planning

Does your Estate Planning feel like a Tug of War?

Our last blog introduced one of the toughest talks we have with clients – those concerning their Adult Children and Grandchildren.  As we said in the outset this is a “Highly Charged” area as these emotions are so close to the heart and the relationships are so intricately interwoven. There is no right or wrong way to raise a child. It is your child and your life. As we discussed in the previous blog, Blended Families: Adult Children and Grandchildren, there are different ways that people are in relationship with their Adult Children and Grandchildren. I just heard a talk on “Expectation and Frustration”. If you have an expectation of your new partner interacting with their Adult Children and Grandchildren in the same way you do, and those interactions are dramatically different, that may lead to “Frustration”.  Often, these discussions can turn into a “tug-of-war” between the partners if they are not addressed.  Let’s explore the way these tug-of-war discussions with blended families can impact estate planning:

Estate Planning with Blended Families:

The Estate Planning for the Senior Couple that is remarrying may take many different forms. I have also seen it change over-time with my remarried Senior Clients as they are modifying their Estate Plans based upon interactions with Adult Children and Grandchildren. We have a tendency to see a number of different versions of Estate Plans that can include the following:

One Basket-Accounting:

This can be a version where the Senior Clients put all of their assets into One Basket, or make them all joint, and do an “Accounting” and the assets after they are both deceased are divided equally between the number of living Adult Children, regardless of where the assets came from, and regardless of how the interactions of the Adult Child have been with their parent.

Some Joint – Some Separate:

Some of my clients have some versions of “Joint Money” in that they may own their house together or have joint bank accounts to pay their own personal over-head. They may keep their other property that was Inherited or Earned prior to this marriage Separate. The person with the most money may pay for travel and entertainment, but they pay their own personal expenses separately. I have seen many versions of this.

How this relates to their Estate Plan can be very different. They may leave some money to take care of the partner, with the other money going to their own biological Adult Children and/or Grandchildren. It can also be a version where they each have their own money and they leave all of their assets to their own biological Adult Children (and/or Grandchildren) or some blended version of this.

More Protected:

You get any number of different adults and they are all going to have different skill sets. Some are good with money and investments, others are spend-thrifts and will just squander any money that they have in short order. They just always have and appear that they always will.

Some Adult Children are in precarious marriages, or have come out of nasty divorces or come out of more than one divorce. There can also be a problem with illness and Special Needs and that an Adult Child or Grandchild may be “Handicapped” or “Challenged” and they may be on some form of Government Assistance that you do not want to “Knock Them Off Of” by an inheritance.

There are the times where you may want to have money for an Adult Child or Grandchild that is “Payable Over Time” so that it comes out monthly, or is paid directly to their providers, so that the money cannot be squander. It also may be a situation requiring more protection for the Adult Child because of their likelihood of a divorce.

Let Them Have It:

The other version of this is when the Senior Adult Parent just says “Let them have it all. If my kid blows it up, that’s their problem.” So the money will go directly to the Adult Child regardless of the consequences.

Reward Relationship:

Some clients want to have different inheritances between their Adult Children. Some Adult Parents want to “Reward” that Adult Child who was loyal to them during their life-time. They may not want to reward the Adult Child who was angry and disconnected or who blamed their biological parent for all of the woes in their life and let them hear about it as much as possible. I have seen Adult Children who keep the Grandchildren away from the Grandparent to “Punish” them because the Grandparent is close to the Grandchildren.

In these type of cases the Parent may give a larger share, or all of the inheritance, to the Adult Child that was “At the table with them”.  This may be their way of saying “Thank you for helping me during my biggest time of need as an adult in my declining years. I am sorry that your sibling(s) chose not to be in a relationship with you or me.”

How the clients do these Estate Plans is based totally upon what their point of view is and their goals. That is why each Estate Plan is different as each family is different for the Estate Planning Lawyer. That is why the Estate Planning Attorney should ask about the clients loved ones who will inherit. You have to find the “Cracks in the Wall” and Plan around them. The client may choose to share nothing. It is their choice.

I always tell the client “It is your money and your loved ones. As long as it is legal and ethical, we can do whatever you want.”

At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.