How do I plan for a blended family?

January 29, 2024
How do I plan for a blended family?

How do I plan for a blended family in Florida?

Approximately 40% of families are considered a "blended family" with at least one of the spouses having children from a prior relationship.  Six in ten women's remarriages create blended families. Failing to plan for the disability or death of one of the parents in a blended family can lead to hurt feelings, family conflict, and unfair results.

“A solid plan to provide for the needs of all family members is especially crucial in blended families.”

What if I do nothing?

This is easiest to illustrate through an example. Husband has one child from a prior marriage and Wife has two children from a prior marriage.  Let's assume nobody adopts anybody else. They all live together in the same house that they own jointly. There are no significant family conflicts. Here are some things that could happen:

Part 1:

Husband dies in an accident. His child returns to live with the biological mother. 50% of Husband's property will go to his Wife and 50% will go to his biological child.  The property that goes to his child will be most likely managed by the child's biological mother until he becomes an adult.  The Wife gets the entire interest in the house because it was owned jointly and his child will get nothing out of the household equity.

Part 2:

Now let's assume that Wife gets remarried.  Then she dies in an accident shortly thereafter and all of the money and the house go to her new husband.  So, 50% of first Husband's property, as well as all of his equity in the house, will go to the new husband he never met. His biological child gets none of that.

As this little story illustrates, doing nothing can be very expensive. Careful estate planning is critical to avoid unfair results. If you do not make a decision, the law will make a decision for you with respect to who gets your property.

What should I do?

Here are some ways we can achieve a better result in estate planning:

  • Revocable trusts. We can use revocable trusts, which are very flexible, to help keep assets separate and ensure that children from a prior relationship receive a fair share of their inheritance.  We can also help reduce issues due to remarriage, as illustrated above. All of this can help to reduce family conflicts and stress.
  • Irrevocable trusts.  An irrevocable trust or trusts may be helpful to keep assets separate and provide for a fair division of assets. Irrevocable trusts often have the added benefit of asset protection to protect property from possible creditors.
  • Prenuptial and postnuptial agreements. These types of agreements can be particularly useful in a second marriage situation. Generally, spouses have a right to what is called an "elective share" in Florida where either spouse can claim 30% of the augmented estate of a deceased spouse, regardless of what that other spouse said in a will or a trust.  Sometimes that is incompatible with a more fair and equitable estate plan.  But, the elective share can be waived in a prenup or postnup agreement. There can also be issues when dealing with a married couples primary resident in Florida due to Homestead rules. These types of agreements can be useful in dealing with that issue, as well.
  • Wills. Every estate plan should have a will to designate that any property left in the estate should be placed into a trust, if a trust was created.  It is also important to deal with any leftover property. In a blended family, it is also possible to have a will contract where the spouses agree in a contract to put certain terms in their respective wills. These contracts can however be tricky to enforce, but are another tool to achieve fair results.

Blended families require careful attention to detail in drafting an estate plan to achieve fair results. As you can see, if you do not make a plan, the State of Florida will use its own plan, which might not be what you want.

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