Blended Families Become the Norm
Estate Planning Poses Cross-Generation Challenges

POSTED: DECEMBER 2011

Blended families, in which one or both spouses have children from previous marriages, are becoming the norm, outnumbering traditional nuclear families. It’s estimated that 50 percent of the children born since 1970 will become members of merged family entities. This significantly complicates financial and estate planning, which must now address a constellation of relationships that includes the couple, ex-spouses, offspring from various marriages and multiple sets of grandparents.

Estate law is playing catchup, and caution is required to ensure that current spouses and all children—“mine, yours and ours”—are safeguarded. Delaying discussion of this often touchy subject can lead to unforeseen consequences, hurt feelings and lawsuits.

Protecting All Parties
Each spouse should, at least, have a will that explicitly addresses disposition of all assets. Aside from avoiding a lengthy and expensive probate estate administration, this ensures that your wishes will be respected. It may be best to distribute family heirlooms during your lifetime. Leaving everything to a spouse, under the assumption that they will “do the right thing,” is a dangerous gamble that could end up disinheriting your kids.

Leaving everything to the kids is tricky, too. Unless specifically addressed in a pre- or post-nuptial agreement, your current spouse is entitled to $50,000 or one-third of your estate, whichever is larger.

Providing for young children from a former marriage can be more complicated. Unless you take appropriate legal action, your former spouse will usually be named by a probate court to manage their inheritance. Consider a Long-Term Discretionary Trust for the children, to be administered by a trustee of your choosing, who will ensure that your assets are distributed in accordance with your wishes.

Family Dynamics
When there’s distrust or hostility among step-siblings and step parents, the situation becomes even more complex. Dreading additional conflict, couples sometimes delay estate planning until it’s too late, increasing the likelihood of future dissension. Far better to talk things through and to consider the diplomatic skills of potential executors, trustees and other representatives. It will be their role to navigate between family factions in order to avoid the type of estate battle that can leave permanent scars.

Even in the most harmonious situations, family dynamics should be considered when formulating advance directives or planning for the contingencies of long-term care. Health care, especially, is an emotional subject, and serious disagreements can flare.

Later Marriages
Late-in-life marriages pose different problems. What happens to the family home? Putting it in both spouses’ names may not be a good idea. While a newly married couple may want to ensure that the surviving spouse can continue to live there, children who grew up in it will likely have opinions about its disposition. Consider placing the house in trust, which protects your spouse for life, after which it can be left in further trust for your children.

Social Security and pension benefits that may have been the foundation of an earlier estate plan may take a hit. Remarriage before the age of 60 cancels rights to collect retirement based on the Social Security record of an ex-spouse to whom one was married for at least 10 years. Survivor’s pensions, too, may disappear.

Medicaid, often considered a safety net for individuals facing annual nursing home costs of over $200,000, doesn’t recognize pre-nuptial agreements. That means that substantially all the assets of both parties must be “spent down” before either one of them is eligible for benefits. With preparation, though, couples can avoid the loss of their nest eggs.

Merged families face an array of financial challenges and an ever-evolving body of law, but candid discussions and an experienced estate planning attorney can smooth the way.

Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP and has been named a “New York Super Lawyer” every year since 2006 and one of the top 25 lawyers in Westchester County. He has been honored as one of the Best Lawyers in New York and America since 2006. A past president of NAELA, SNA, a CELA, and a fellow of ACTEC, Mr. Krooks may be reached at (914) 684-2100 or (212) 490-2020, or visit the firm’s website at www.littmankrooks.com.

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