With divorce rates approaching 50%, many families consist of second or subsequent marriages and blended families. When blended families are involved, there are special estate planning considerations that must be addressed.
It is important for blended families to understand the impact of failing to have an estate plan.
Under Virginia law, if your spouse has children from a previous relationship and he or she dies without a will, you receive one-third of the estate and his or her children receive two-thirds of the estate.
This is often a surprise to Virginia families who may believe that the current spouse should receive everything that his or her spouse leaves behind.
To avoid the default rule mentioned above, wills for blended families can be drafted. Typical wills for blended families may give all of the property to the surviving spouse. Another option is to designate certain property to the spouse and other property to the children.
However, once one spouse dies, the surviving spouse is free to then go and change his or her will, and can effectively cut out the decedent spouse’s children from a prior relationship. Therefore, you may want to consider other options than leaving everything to your spouse and then expecting him or her to subsequently divide property with your children.
We, at Golightly Mulligan & Morgan, can provide clients with an estate planning agreement, to lock in the estate plan and to prevent the surviving spouse from changing the plan after the first spouse passes.
An alternative to wills for blended families is a trust. A trust is a legal document that sets out specific instructions regarding how you want your property managed.
You can choose to manage the property that you deposit into the trust during your lifetime and name someone whom you want to manage the property after your passing. This way, you can ensure that your surviving spouse can benefit from all assets in the estate for the rest of their lifetime, and also that at your surviving spouse’s death, the remainder will pass to who you want.
A trust provides greater flexibility for individuals because trust funds or property can be used as the trustee sees fit, such as for the beneficiary’s health, education, maintenance, and support. It will also give the grantor (spouse that made the trust) peace of mind to know that after their death, their spouse will be taken care of, and that their spouse will not be able to cut out their children from a prior relationship.
Blended families may benefit from beneficiary designations. If a spouse, with a child or children from a prior relationship wants to leave everything to their current spouse, but also wants to ensure that their child(ren) from the prior relationship are taken care of, they can choose to name the child(ren) as the beneficiaries on a life insurance policy or a qualified retirement account, and leave everything else to their current spouse.
At Golightly Mulligan & Morgan, we carefully listen to our clients’ wishes and guide them through the relevant state laws that may impact them. We build a customized estate plan that clearly communicates their wishes and achieves their objectives.