Around 1 million Americans get remarried every year,Disclosure 1 with the majority of remarriages forming blended families.Disclosure 2 Blended families, which can be defined as those involving stepchildren, have unique challenges in navigating legal and financial obligations—and the relationship dynamics that can often accompany their situation—that they need to consider as they pursue their wealth goals.
Rarely in the world of wealth planning is this challenge greater than in the realm of estate planning. Finding the right balance for the emotional and financial considerations required to produce an equitable, balanced legacy adapted to the changing needs of your blended family can be complicated.
To help simplify it, we’ve gotten insights from Mikel Van Cleve, Truist Wealth digital senior strategist and Ph.D. student with published research focused on blended families, and Sarah Slattery, a family focused wealth strategist with Truist Wealth working to connect a family’s purpose with their financial goals. With decades of combined experience, they provide an overview of the first principles you’ll need to observe and the first steps you’ll need to take to put together an estate plan that respects the needs of every member of your family.
Start with emotional considerations.
In any estate plan, accounting for and balancing the emotions of all parties involved is crucial to successfully passing on your legacy. But with blended family estate planning, these emotional dynamics can often take precedence over virtually all other considerations. “The bottom line is there are typically more people in a blended scenario—which generates more emotional considerations that have to be factored into planning in order to maintain harmony in your family both during your life and after your passing,” Van Cleve says.
For example, it’s not uncommon within nuclear families for one person to leave the entirety of the estate to their spouse, who will then pass it down to the couple’s children. In a blended family scenario, you may want to provide for your current spouse, children from a previous marriage, stepchildren, and you and your spouse’s shared children. And not everyone may see eye-to-eye on how to split up those assets now or in the future. If you wanted to leave your estate to your current spouse but died intestate (without a will) or didn’t update your will, it could trigger a default legal mechanism that transfers all assets to your shared children or your spouse’s children, unintentionally excluding your biological children from any previous marriages from their anticipated inheritance.
“Create strong, clear channels of communication that enable your children and stepchildren to express any expectations they may have about inheritance and that empower you and your spouse to express your combined and separate wishes for your estate,” says Slattery. “Establishing that channel replaces unspoken assumptions—which are a prime source of emotional turmoil and family disharmony in estate planning—with an honest dialogue that brings opinions and wishes about the ownership of assets and liabilities out into the open in a more respectful manner.”
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Align documents with expectations.
When it comes to the technical side of estate planning for blended families, the careful creation, structuring, and implementation of wills and trusts is a very important aspect of the process. But in order to ensure each of these core estate planning documents is calibrated to the specific needs of your blended family, both Van Cleve and Slattery recommend you and your partner first take stock of:
- Any alimony, palimony, and child support obligations
- The current existence or creation of prenups and postnups
- Power of attorney designations
For example, if you have child support obligations but pass away before those children reach legal adulthood, those payments will likely need to continue even after your death—an obligation that affects how you and your current spouse will structure your wills and trusts. And in the event you have a prenuptial agreement for your second marriage, in many cases it comes with specifications about what happens to assets at divorce or death.
“Unlike a will or a revocable or living trust, a prenup can’t be altered once enacted without the consent of both spouses, so if its terms cover asset distributions in the event of death or divorce, they will influence the shape subsequent wills and trusts take,” says Slattery. “If there’s a shift in family dynamics, you can always be more generous than the prenup. But that generosity should be clearly spelled out in your documents, acknowledging the provisions in the prenup and any postnups—each aspect of which should be discussed with your attorney.”
Whatever decisions you make, working with an estate planning attorney to incorporate those changes into the selection and structuring of your wills and trusts should be central to the process. Confidence in their professional know-how will give you the ability to step back from the technical aspects of legacy planning and create a considerate dialogue about your choices to your loved ones—which fosters the creation of responsive, adaptable planning by empowering you to focus on harmonizing your blended family’s emotional and financial needs.
Before you begin estate planning within your blended family, you may first need to decide how you’ll commingle finances in your new relationship. “With wealthier clients in a blended family scenario, even something as standard to estate planning as tabulating individual and combined net worth of spouses can become tricky,” says Van Cleve. “If one spouse had more money than the other at the start of the relationship, how will that affect dividing up assets among various children?”
“One of the most common methods we use for helping clients answer that question is the three-bucket approach,” says Van Cleve. “You have one bucket for your assets, your spouse has one bucket for theirs, and then there’s a middle bucket for commingling assets.”
The specifics of what assets and planning documents go into each of these buckets are going to vary case by case depending on the relationship structure of your blended family. But in general, the commingled bucket is ideal for joint goals and shared visions you have with your spouse at the start of your union and for separating out assets you want to pass down to any children you may have together. Your individual bucket may include a specific trust that provides for older children you may have from a previous marriage—helping avoid family disharmony by partitioning off asset distributions in a way that minimizes potential conflicts about which child is entitled to which asset.
Working with your Truist team—which can typically include your wealth advisor, wealth strategist, trust advisor, and investment manager—will help create a customized approach that reflects your family’s needs but also maintains a flexibility that extends beyond day-to-day money management to various aspects of inheritance. This isn’t just useful when it comes to the bequeathing of family heirlooms or vacation homes, either—it also helps ensure financial obligations preexisting your marriage aren’t passed along to your spouse or heirs in the event of your passing and helps address any potential questions about liquidity if one spouse is incapacitated or passes suddenly.
Think in terms of cycles.
Whatever structure you end up giving to your blended family estate plan, it’s important to keep in mind that this is a process and—even more so than with a nuclear family—an evolving one at that.
“Changes in dynamics that affect planning tend to take place at a faster rate than in nuclear families,” says Slattery. “In addition to bumping up scheduled estate plan reviews from once every five years to once every two or three years, spouses need to adopt a perspective on their estate planning situation that’s as unique as their family.”
“Keeping the peace, fostering happiness, and ensuring no family member feels left out or unloved can sometimes seem like an impossibly tall order,” says Van Cleve. “But with patience, perspective, open communication, and professional support, that balance is much more achievable than it might seem at first—even with the added complexity that can come with a blended family scenario.”
