HIS, HERS . . . THEIRS Estate Planning for Blended Families

By David Hoffman

Remember all of those TV shows about parents of children not their own? There was the man with three sons who marries the woman with three daughters, and the man with one daughter who feels compelled to adopt two sons, and the single, musical mother of 5 who takes in a 6th just to round out the band. And so forth and so on. They were cute. They were charming. They were legal nightmares. Why you ask? Well, because of that little known footnote to every script, the law of intestacy.

Let’s assume that the parents of the first “Bunch” did not have wills, trusts, or anything else that even remotely resembled estate planning. And let’s say that the dad died first. Anything that was in joint name with the Mrs. became hers. If everything was in joint name with the Mrs., it all became hers. Even if our TV dad managed to keep something in his own name, at least half of that became hers. And then – and here’s the real football in the face – when she died, all of it passed to her three daughters -nothing to the boys. Why? Because the boys were not her “kin” and the law of intestacy says that it all goes to her next of kin. So who’s laughing now?

Of course, in the real world, nobody wants to leave a child’s inheritance to chance. But, unlike a traditional family, parents of a blended family usually have a more difficult time deciding exactly what that inheritance should be. Let’s take the “Bunch” type of family described above. In such cases, one parent may bring significantly more assets into the marriage while the other parent brings more children. A particularly amicable couple may decide to simply pool what they’ve got and divide it evenly among all of the children; even though that will almost certainly result in the poorer kids getting richer and the richer kids getting poorer.

On the other hand, such parents may choose to earmark their separate estates for their respective children. Typically, these estates are described in terms of what each spouse owned on the wedding day plus half of everything acquired thereafter. The trick is tracking assets that, over time, tend to lose their identity. It can be done, but it requires carefully worded documentation and a considerable amount of accounting discipline.

Furthermore, our “Bunch” could be a staggered type of family. This is the case where one spouse, let’s say the husband, has children by a prior marriage as well as children by his second marriage. For his new wife, however, this is her only marriage and these are her only children. Matters are complicated further if the children from the husband’s first marriage are considerably older than his new progeny. In such cases, no matter how they decide to divide the estate, such couples almost always choose an estate plan that delays the distribution of shares until the youngest child is raised and educated.

Because blended family estate plans can last for decades, the only practical vehicle for implementing any of them is a living trust. Aside from providing for the children, a trust provides a home and financial security for the surviving spouse as well as probate and tax avoidance for the family as a whole. A prenuptial or postnuptial agreement can be used in conjunction with the trust to prevent the surviving spouse from amending her stepchildren right out of the plan – as well as to secure the inheritances of all of the children against future step-parents.

As if all of this were not enough to consider, there is yet one more problem unique to blended families. The terms of a divorce decree may require a parent to bequeath all or part of his estate to the child of a prior marriage or provide that child with life insurance. The terms of the trust would need to take such obligations into account and provide for different distribution schemes depending on whether or not such obligations have been met.

Sitcom families have one great advantage. They are cancelled long before anyone has a chance to die. I have often thought about those Tennessee mountain people who struck it rich and moved to California. As far as I could tell, the patriarch was the father of the young woman but the uncle of the young man. There was a granny in there, but it wasn’t clear exactly whose grandmother she was or if she was even related to any of them. On top of it all, there was all manner of critters, which for all I know may have had rights in California. I guess we will never know who would have gotten how much if any one of them had predeceased the other. And that is sad indeed because, in the end, it wasn’t just a show, it was a bar exam question.

David Hoffman is a Virginia attorney who limits his practice to wills, trusts, probate and estate taxation. His offices are located in the northern Virginia suburb of Fairfax City. 703-267-6100.



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