Estate planning for blended families is a complex subject. The process may involve unique challenges because an absolute answer for determining how property should be handled does not exist. This post will give you an overview of some property distribution considerations and options.
Blended Families and Property Division
Blended families include at least one couple where one or both spouses have children from a previous marriage. You are part of a blended family if your descendants are in a marriage that includes children or stepchildren from another relationship. Stepfamilies are a part of many lives: divorce remains relatively common, and most ex-partners remarry.
Two of the biggest challenges with estate planning for blended families are deciding how you want your property to be divided and determining the best way to accomplish your objectives. Here are a few fundamental questions that can define the structure of your plan:
- Should the majority of my assets go to my own children?
- Should the inheritance be shared with my stepchildren?
- How much of my estate must go to my spouse?
- Should I provide for my ex-spouse too?
- How can I protect an inheritance from my daughter- or son-in-law?
- Can I decide when and how heirs can use their inheritance?
- Should I provide an inheritance outright and with no stipulations?
- If a beneficiary passes away before I do, who should inherit that share?
- Is there a possibility of my spouse disenfranchising my heirs?
- Who would be the most trustworthy, responsible executor or trustee?
Avoiding Problems and Disputes
Without a solid and clear plan in place, many families, especially blended families, have disagreements over the distribution of the inheritance. These disputes can be costly and time-consuming. Planning now can help avoid potential problems. For example, if want to give your assets solely to your own children, you need to be diligent about keeping your funds separate from your spouse today. Adequate planning can help ensure that the inheritance is preserved and distributed properly.
Which Beneficiaries Will Get the Inheritance?
- If you recently moved to Florida, now is a good time to evaluate your estate plan and ensure that it complies with relevant laws. Updating your plan is often the best course of action.
- Make sure that your ex-spouse isn’t a beneficiary of any insurance policies or financial accounts (as per the structure of your divorce agreement). Although Florida laws try to guess what you would have wanted when you divorce, you can prevent erroneous distributions by updating your choices. But submitting the form isn’t enough. You should request a confirmation letter from the company.
- Be certain that a beneficiary is named on your retirement accounts. Otherwise, those assets are controlled by your estate (or poured into your trust), which might be different than your intent or might unintentionally exclude an heir.
- You may not be able to give all of your assets to your children. Without a nuptial agreement, your surviving spouse is entitled to an elective share equal to 30 percent of certain property included in the elective estate.
Distributing Assets Based on Ownership
Keep in mind that your ability to transfer property depends on who owns it. If you own an asset independently, you likely can give that to any beneficiary. But things change if you own property as joint tenants with a right of survivorship. Further, homestead laws in Florida control how that real property can be left in a will.
When the real property in question is your principle residence, Florida homestead laws provide rules if you are married or have minor children. If those minor children are not those of your spouse, your spouse still has at least a right to a life estate in that home. This allows that spouse to remain in the home as long as desired. When the life estate ends, the house will be fully controlled by the remainder heirs, such as your children from the prior marriage, or sold so that the proceeds can be distributed.
The distribution of assets is just one consideration. You also need a plan for managing assets that are held in a trust, guarding against harmful spending, and protecting the status of tax-deferred retirement accounts.
Creating a Plan
Property division for blended families is more complex than average; this makes it even more important to have well-drafted documents that explain your wishes and distribute your property as intended. Plans like these aren’t completed in one day. It takes time and careful thought to consider each person in your family and the assets that you manage.
Because estate planning requires state-specific guidance, it is especially important to work with an estate-planning attorney. If you’re ready to get started, contact an estate planning attorney to schedule an initial consultation and take it from there.