For more information about Estate Planning for Blended Families get in touch with our Private client team today on 01284 767766.
Estate Planning for Blended Families
Navigating your new start as a blended family can be an exciting time – though for many blended families, it is not without its questions and complexities. When it comes to estate planning, determining the Will options for blended families, and understanding how children from previous relationships factor into your new life, getting the right advice and information is key.
That’s why we’ve created this guide for blended families – with guidance on estate planning, legal and financial implications, and more.
What is a blended family?
A blended family is when a couple come together, bringing children or family members from previous relationships to the new family home. The term is used to refer to families with stepchildren, half siblings, and extended family members who live in the same household. – with blended families far more commonplace than many of us think in today’s society.
While this in itself is fairly straightforward, it is when the couple starts to think about making a Will that things can become complicated – with partners questioning how to ensure all of the children from previous relationships and their new relationship get their fair share, while also looking after the needs and interests of the spouse who is left behind.
How does estate planning differ for a blended family?
In a family of two parents and children who were born of that single relationship, it is usual to leave everything to your spouse/partner in your Will, on the assumption that they will then provide for all of the children in their own Will. Such Wills are commonly referred to as mirror or similar Wills.
However, this type of Will causes issues in blended families for a number of reasons. The primary concern is that the surviving spouse/partner can receive the main bulk of their deceased spouse’s inheritance and wealth, and then change their Will so that when they too die, they leave little or nothing to the deceased’s own children. On top of this, the mirror or similar Will structure means that in a blended family dynamic, the children of the deceased will have to wait until the death of the surviving spouse/partner before they inherit anything – even though that surviving spouse is not their birth parent.
There are solutions that blended families can look into and explore as a way of protecting the interests of all parties, however first we are going to uncover a few other key questions that we often get asked by new spouses and families.
Couldn’t I just leave everything to my children, and let my new spouse do the same for their own children?
If you’re married and decide to each split your own inheritance between your own children from previous relationships, especially if you don’t have any children together, you will miss out on some of the other factors that should be considered. These include life insurance, death in service benefits, pension death benefits, the potential for either or both parties to receive inheritances themselves, and estate and inheritance planning. ‘Spousal exemption’ is a legal exemption which allows you to transfer unlimited inheritance to your spouse/civil partner, completely tax free. However, if you decide to leave everything to your children and they then inherit your wealth ahead of a surviving spouse, they will likely end up paying inheritance tax if the value of the your estate exceeds available allowances.
More than this, your spouse/partner may be left with not enough capital to support themselves for the rest of their life. Thus, there are stumbling blocks which make estate planning under two separate Will agreements, in more cases, more harmful than helpful.
When should I make a new estate plan?
If you remarry, it is advised that you consider the changes you need to make to your estate plan as soon as possible, to cover all eventualities and to protect both your existing and new family and new spouse in the event of your death.
Alongside the obvious need to plan for the allocation of property and financial assets, it is also important to consider your pension, life insurance, and other finer details which may not be tied up as part of your original estate plan. The more you can address in your Will, and the earlier in the relationship you discuss such complexities, the quicker you will learn what your new spouse thinks about the process.
What are the best estate planning options for blended families?
There are a number of options available to you and your family when it comes to building a new estate plan. The main priority should be to alleviate any concerns about inheritance size and naming an executor upon your death, clearly outlining your estate plan in a Will that can be accessed by your law firm.
The most popular options for estate planning with a blended family are:
Upon the death of one spouse, all of their assets will go into a family trust – with the surviving parent or spouse responsible for distributing assets to any and all children.
Upon the death of one partner, this structure sees all assets transferred to the surviving spouse.
Upon the death of one spouse, a marital trust transfers all assets to the surviving partner, though the deceased can outline and earmark property and financial specifics for children which must be honoured upon the death of the second spouse. This is a good way to ensure the long term protection of children.
This structure sees the Will itself outlining each bequest for each child and individual – without the involvement of a spouse in the decision making upon your death.
The importance of open conversation
Each of these options has benefits and drawbacks, with estate planning an integral part of your life as a newly married couple in determining the outcome of your estate and assets after death. In short, it is important to make sure that when one of your dies, any children from previous marriages/relationships and from your new marriage are properly provided for.
The more thorough you can be when approaching the topic and subject of estate planning, the smoother the process will be when it comes to dividing assets and providing for every member of the family. We advise that you revisit your estate plan every few years to ensure that it is up to date with the details of your property and estate, and make sure that any Wills you have outline the specifics of your inheritance wishes.
What happens if I don’t have a Will?
If a spouse or married partner dies without a Will, their assets are automatically inherited by their spouse at the time, under the rules of a process called intestacy. In short, what this means is that the spouse will receive the first £270,000 in value of the deceased’s estate, and any remaining value will be split between the spouse and any surviving children.
While this process works for some, if you are concerned about your biological children or children from a previous relationship getting their fair share, it is important to address such concerns and take the time to create a Will while you can.
What to do next
It has never been easier to find the right advice and guidance, that will help you to make a Will and plan your estate thoroughly. With blended families a normal part of society, there is nothing we haven’t seen or heard before.
Our job is to provide legal advice to families from all walks of life and with all backgrounds, without judgement or bias. When you come to our law firm for advice, we will advise you on how best to handle your assets for the benefit of your children and your new spouse, considering the financial implications for all parties and ensuring that when you die, everyone you love is well cared for and provided for.
It’s so important to know your options when deciding how you wish to divide your estate and making a Will. For more information and Estate Planning and Will options get in touch with our Private Client team today on 01284 767766.
Where to find us
We have offices in Bury St. Edmunds, Sudbury and London.
© Atkins Dellow LLP 2022
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