Blended families are becoming more prevalent in the United States. As a matter of fact, according to the US Bureau of Census, blended families are already the predominant family structure in the United States.
For purposes of this article, we will define a blended family to be any couple where at least one of the partners has at least one step-child.
If you fall into this category, there are several special matters for you to consider when putting together an estate plan.
First, you will need to consider who will receive your tangible personal property. Typically, we recommend clients leave their personal property to their surviving spouse. In this situation, you may want to include a personal property memorandum which allows you to make exceptions, such as passing your jewelry to your own kids. When the first spouse passes away, there should not be any questions as to who gets to keep the kitchen table and living room furniture, these items should typically go to the surviving spouse.
Second, you will need to determine what happens to your home. For many families, their home is the single largest asset they own. While nobody wants their spouse to be left homeless, many individuals don’t want to give away their most valuable asset to anyone other than their own children. In this situation, it may be appropriate to transfer the house to a trust which allows the surviving spouse to remain in the home for his or her lifetime. When the surviving spouse passes away, the home can be sold and the proceeds can go to the children of the original homeowner.
Third, you will need to determine whether to have a joint trust or individual trusts. In making this determination, you will need to consider whether your estate is taxable and whether both individuals are comfortable sharing ownership of their assets. If you are not comfortable with joint ownership or you have a taxable estate a joint trust is typically not the right fit.
Finally, you will need to plan for the elective share. In Colorado, the elective share guarantees surviving spouses the right to some of their significant other’s assets upon their spouse’s passing. For couples who desire to pass their property to their own children, I recommend speaking with an estate planning attorney to help determine how to minimize the effects of the elective share.