Most of the estate laws in place today were written at a time when the typical family looked more like Leave It to Beaver than Modern Family. Families these days come in all shapes and sizes, and estate planning must adapt to the variety of relationships that we see today.
The default rules of the state - while often appropriate for the traditional family - can spell disaster for other families. So being proactive about putting a plan in place is particularly important if your family does not fit the conventional mold.
There are several strategies and tools we use to help families create a flexible plan that works for their unique situation.
Planning for Blended Families & Second Marriages
While a will leaving everything to one’s spouse may be sufficient for a traditional family, in families where there are children from a prior marriage, more creative planning is often necessary. Leaving everything to your spouse without ensuring that your children are provided for in your spouse’s estate could have unintended consequences.
To illustrate, suppose a man has three children from a prior marriage and dies leaving everything to his current wife, with the expectation that she will leave remaining assets to his children. There are many scenarios that might result in the children's inheritance being lost:
- His wife dies without a will, so everything is goes to her next-of-kin.
- His wife remarries and and doesn't sign a pre-nuptial agreement. Even if she executes a will leaving everything to the children, if she dies before her new husband, the husband will have a right to one-third of her estate.
- The wife may simply decide to leave all her assets to her own children or another party, leaving your children with nothing.
Fortunately, there are strategies that you can implement to ensure that both your spouse and your children are taken care of when you’re no longer around.
Planning for Unmarried Couples
Unmarried partners may face unique challenges in ensuring that their loved ones are taken care of if something happens to them. Even if you’ve been with your partner for decades, without a will, your assets may be distributed to estranged and distant family members or, in the absence of living relatives, your assets will be transferred to the state. The person who has been by your side all those years can be left destitute.
To make things even more difficult for unmarried couples, your partner is not entitled to the estate tax exemption that applies to assets left to spouses. Certain planning techniques can alleviate the unfair tax burden that falls on the surviving partner.