Estate Planning for Blended Families

Blended families face unique estate planning challenges that, if left unaddressed, can lead to conflict and unintended outcomes. This episode explores practical legal tools like wills, trusts, and contracts to ensure your loved ones are protected and your wishes are honored.

Transcript

Hello, folks. It’s Peter Klenk from Klenk Law, here to continue our ongoing conversation about the fascinating subject of death and taxes. That’s right—exciting stuff!

Today, we’re going to talk about planning for blended families—an issue that’s becoming quite common. People are remarrying, have kids from a first marriage, and need to plan around how to deal with that. If ignored, it can lead to a lot of problems.

It can cause issues while you're alive, especially if you have kids from a prior marriage and you’ve remarried. Your kids, your new spouse, and the stepkids may all feel anxious about what you’re going to do. And vice versa—your spouse may have the same concerns. It’s not the easiest thing to talk about, but it’s a conversation that can help avoid a lot of future conflict and expense. It also helps reduce anxiety while you're still around so everyone can be a little more at ease.

Let’s talk through some basic ideas. These are just general thoughts—of course, we can always sit down and go deeper. But here are a few options that are commonly used to address this type of situation.

First, when you're doing your wills, it’s important to remember how your assets are set up. If you and your new spouse own everything jointly or name each other as beneficiaries, then your assets will likely pass directly to your spouse. That means your will might say one thing, but it won’t matter if your spouse receives everything automatically.

Ask yourself: is that what you really want? Because if your spouse outlives you, your kids might become a distant memory to them by the time they pass. Your kids could end up with nothing.

Now, maybe your spouse has the best of intentions to take care of your kids—but life happens. They might get sued, remarried, divorced, or influenced by their own children. By the time they pass away, your children might receive nothing.

So, what can you do?

One very popular option we use is called a contract to make a will. This is a binding agreement between you and your spouse about what will happen with your estate. Here’s a general example:

You can agree that when you die, your spouse gets the house and can stay there for life. But if they sell it, they must give half the proceeds to your kids. Or you can agree that when your spouse dies, the house is sold and your kids receive a share—or even that it goes directly to your kids. All of these are valid approaches; you just have to choose what fits your situation best.

This contract is binding. While both parties can agree to change it later, neither one can change it on their own. So if you pass away and your spouse decides they don’t want to follow through, maybe trying to give the house to their own kids instead—that’s a breach of the agreement.

Who enforces it? Not you—you’ll be gone. But your kids can. We've handled many of these situations. We go to court and show the judge the binding agreement. The judge can order the property to be transferred as originally agreed. These contracts are powerful tools that offer peace of mind and protection.

Here’s another example: even if you don’t have a blended family, you might still say, “When we die, we leave everything to each other, but whoever dies last must leave 80% of what’s left to the kids.” That ensures the bulk of the estate stays in the family. The other 20%? Sure—your spouse can leave it to whoever they like. But you’ve made sure your kids don’t get completely cut out.

There are plenty of ways to contractually structure things so your spouse is taken care of and your family—or even your favorite charity—is respected long after you're gone.

Another option is ownership structure. If you own everything jointly, your will doesn't matter for those assets—your spouse gets everything automatically. But if you keep some assets separate, your will can control what happens to them. For example, you could set up a trust that provides income or an allowance to your spouse, lets them live in the house, and then passes everything to your kids when your spouse passes away.

You can even set things up so that your spouse doesn’t have to agree. If you own something separately, we can build your preferences into your will and create a trust that executes your wishes exactly.

We can also brainstorm creative solutions that help everyone part ways peacefully. One tool we use often is life insurance. Maybe your spouse wants the house, and your kids just want cash. We can arrange for life insurance proceeds to go to the kids, while the spouse keeps the house—so no one is waiting for someone to pass away to get what they’re owed.

As you can see, blended families come with the potential for conflict. The best way to address it is with a solid estate plan. That’s what we do—and we’ve been doing it a long time.

You can come in and meet with us. If you want to talk through your personal situation, we can become your attorneys and keep everything under attorney-client privilege. In that case, we can't represent your spouse—only you. But if you and your spouse are on friendly terms, you can come in as a team and we can help guide you both.

If you're not in agreement, it’s better for us to represent just you. That way, when we talk through the pros and cons, it stays your private business—not your spouse’s.

So think through what’s best for your situation.

There you go—just some general ideas. Give us a call and schedule a time to brainstorm. The number is 215-790-1095—that’s our main line for all offices and departments.