"But That's MY Inheritance!!!" 5 Estate Planning Issues for a Blended Family - and How to Solve Them

There are few situations more fraught with the potential for conflict than that of the blended family. After a parent passes and adult children begin wondering why their step-parent is spending all of “their” money, odds are high the relationship is not going to thrive.

Not planning, or planning the wrong way, can add fuel to the fire…

The interesting part is that people rarely wonder why their own mother or father is spending “their” inheritance. Blended family situations are just an entirely different animal, but setting the expectations for everyone involved does a lot to change the landscape.

Conflicts can be reduced and even avoided with just a little bit of foresight and a good dose of planning.

Here are 5 of our favorite tips to inspire, encourage, and foster family harmony long after you’re gone.

1) Home is where the heart is…. Be clear on your plans for your home, whether it is one your children grew up in, or one you and your new or newer spouse bought together after the kids moved out. If you’re on a second (or more marriage), you may have had or contributed a substantial amount of equity to your home. How do you want that to be distributed when you’re gone? Do you want your spouse to stay in the home and have proceeds from its sale pass after he or she does? Or what happens if he or she sells that home? Would you want your kids to have an incentive or discount to purchase the home by offering some gift of equity?

There is no right or wrong answer here; the important thing is that you decide, and have it memorialized in a way that ensures it will happen.

2) Snowbird syndrome… If you and/or your spouse have been working and saving for retirement, you may have accumulated substantial retirement assets. Where will those go when you pass? Recent tax code changes impact how long your children can stretch out an inherited IRA, which has impacted the benefit of certain types of long-range IRA planning. You could be better off leaving certain assets to your kids in a different way and spending more of your IRA - rather than leaving it to them. Whatever you choose to do, be sure your beneficiary designations are up to date and reflect your wishes. And if you're not sure what the right choice is for you, we would be happy to talk with you about the options....

3) A tisket, a tasket, a very expensive casket… It is amazing how infrequently people plan for funeral expenses – and how often family feuds begin over this important and often overlooked event. Plan ahead, be sure you know who is paying (or pay for it yourself before you go), and be clear about what you want.

4) The family jewels… Maybe you don’t exactly have a set of jewels just like the royal family, but personal property is a place that creates LOADS of conflicts. It may seem picayune, but write down EVERYTHING you want to have pass to someone else. If you worry that there could be a problem down the road, photograph and document what you want to have pass along to those you love. Or, consider giving it before you’re gone, because once you are, who knows who will be in the house first.

5) Give them “their” inheritance first… Or at least a small part of it. If you have assets you are leaving behind, consider leaving a small amount to your children at the time of your passing. Sure, they will be grieving and money won’t bring you back, but making even a small distribution, with the expectation that there is likely to be a future one after your spouse is gone, will go a long way towards reducing the notion that a step-parent is spending ALL the money.

Not sure whether or how any of these things apply to you and your situation? Or have other ideas in your head that may be keeping you up at night? Schedule a call, learn about our process, and see if it’s time for you to take some action.

Your family will thank you one day.