Common Mistakes in Estate Planning for Blended Families

Today, an increasing number of families in the United States are considered blended families; families that comprise of two adults, married or unmarried, with at least one of whom has children from a prior relationship.

Just because the estate tax doesn't affect very many taxpayers anymore, and there is talk of abolishing the estate tax all together, doesn't mean that estate planning isn't needed. The main reason to have an estate plan is to avoid probate. Probate refers to the process whereby certain of decedent's debts may be settled and legal title to the decedent's property held in the decedent's name alone and not otherwise distributed by law is transferred to heirs and beneficiaries. If a decedent had a will, and the decedent had property subject to probate, the probate process begins when the executor, who is nominated by the decedent in the last will, presents the will for probate in a courthouse in the county where the decedent lived, or owned property. If there is no will, someone must ask the court to appoint him or her as administrator of the decedent's estate. Often, this is the spouse or an adult child of the decedent. Once appointed by the court, the executor or administrator becomes the legal representative of the estate. The entire goal of most estate planning is to avoid the probate process all together.

The divorce rate in the U.S. is 50%, and a lot of divorces involve children from those broken marriages. If one person has children from a previous marriage, and the other person has children from a previous marriage, when the couple is married, you have a blended family. Blended families have completely different dynamics than do traditional planning. Estate planning for these type of families is tricky and can poise some problems.

Faculty

Craig W. Smalley, MST, EA

CWSEAPA®, PLLC