Legal-Ease: Hers, his and ours — blended family estate planning

Blended families that include stepfamily members, half-siblings, estranged family members, former spouses, new spouses and everything in between are common in our society. Traditional, very simple estate planning may not be sufficient to accomplish estate planning goals in many blended family situations.

Traditionally, estate planning included wills and non-probate tools like transfer-on-death documents. Trusts became common several decades ago for tax savings reasons, but the extra benefit of trusts’ ability to avoid probate was also very handy.

Trusts, as valuable as they can be, are usually a bit more expensive to prepare than simple wills. Until a few decades ago, many attorneys did not have a sufficient level of estate planning sophistication to prepare good trusts, and the cost to prepare trusts was much higher than the cost to prepare wills during that same time period.

Back in those days before many attorneys felt comfortable using trusts, attorneys often had couples with children from prior relationships first sign wills that mirrored each other and then sign a contract that neither spouse/partner would change his or her will for the rest of their lives.

For example, a husband with kids from a prior relationship might marry a wife with kids from a prior relationship. The couple may even have more kids together. The husband and wife might sign wills that give everything owned by either of them to the survivor of them when the first of them dies.

The couple’s wills would typically also include some specific distributions to the pre-marriage kids of the husband and wife.

And the couple might then also sign a separate contract that stated that the surviving spouse would not change his or her will after the first spouse died. This contract would ensure that just because one spouse died first, that spouse’s kids would not be disinherited.

The problem with this structure is that the kids of the first spouse or partner to die might not even be aware of the contract. Such a lack of awareness would empower the surviving spouse or partner to ignore the contract to not change his or her will and completely disinherit the kids of the first spouse or partner to die.

The much, much better estate planning route in the context of blended families today is to use a trust, which is most easily thought of as being a simple set of rules. The trust may be part amendable and part not amendable, to protect each spouse’s/partner’s kids from former relationships.

Trust law requires the trustee, or administrator, of a trust to give a copy of the trust to each beneficiary, the person who owns or will definitely, eventually own something that is in the trust. Trustees are also required to give updates to beneficiaries on a regular basis regarding the assets and money that is in the trust. A surviving spouse or partner of a couple’s joint trust will likely serve as the trustee when the first spouse or partner dies and will therefore have a legally enforceable responsibility to honor the shared wishes of both the surviving spouse or partner and the first-deceased spouse or partner.

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.