How to Estate Plan for Blended Families

At the Hoggatt Law Firm, PLLC we have spoken a lot about the importance of estate planning, but we have not yet touched on how estate planning works with blended families.

A blended family is where one or both partners have children from a prior marriage. Estate planning can become challenging as each partner may want to provide for their own children and/or their stepchildren after they pass away, whereas some may have tenuous relationships with their stepchildren. This leaves many individuals wondering how to prepare their estate plan.

In community property states, marital assets are usually classified as the partner’s separate property, the other partner’s separate property, or their community property. These classifications affect the distribution of property in the event of death or divorce. There is typically a presumption that any property acquired by either partner or both partners during marriage is community property. Accordingly, if there is no estate plan or agreement of the parties or other unique situation, community property generally includes all personal earnings of both partners earned during the marriage. Property purchased with community property during the marriage is also community property. The title of a property is not typically determinative of ownership. Texas, Arizona, California, Idaho, Louisiana, Nevada, New Mexico,  Washington, and Wisconsin are considered community property states.  Rules of community property vary slightly in each of the nine (9) states. 

Creating an estate plan involves understanding your goals, your partner’s goals, and how you want to provide for each other and your children. Estate planning involves reviewing obligations to former partners under divorce decrees and federal and state tax laws governing your assets. In some cases, a marital agreement may be recommended to clarify spousal rights and property classification, especially if there are significant separate property assets (assets acquired before the marriage or through gift/inheritance). You and your estate planning attorney should also discuss beneficiary designations and possible trust planning.  A beneficiary designation is the description of the person or persons you want to receive a specific asset upon your death. If these designations are not updated, you may unintentionally pass your assets in a manner that does not flow with your estate plan. At the death of the first partner, assets with valid survivorship rights pass non-probate to the named party and should follow your intended estate plan.  Trusts can be used to hold assets for the surviving partner’s benefit for their life while ensuring assets are maintained and preserved for children from a previous marriage upon the surviving partner’s death. This is especially true if there is a concern for remarriage upon the death of the first partner. Blended families can benefit from trusts that can provide financial support for your partner while leaving assets for your children.

For example, in Texas, if you are married and you have children from a prior marriage, and you die without a will with your partner and children surviving you, the following will happen to your separate property and community property: (i) separate property will be distributed with the surviving partner receiving a life estate only in 1/3 of real property with and the balance passes to decedent’s children; and (ii) your share of community property will be divided equally among your children and your partner will retain their share (i.e. your children and your wife now are co-owners in the community property) .

Estate planning for the blended family can be complicated and emotional. It requires communication, thought, and carefully constructed legal documents. Please reach out to The Hoggatt Law Firm, PLLC if you feel that we could assist you with any of the legal matters discussed in this article. The Hoggatt Law Firm, PLLC is ready to assist you with your estate planning, probate and business’ legal needs.

The Hoggatt Law Firm, PLLC presents the information in this article for general education purposes only. Although this article discusses legal issues, it is not legal advice. The law and the content may have changed since this article was written, and The Hoggatt Law Firm, PLLC makes no warranty or guarantee about the continuing accuracy of the information presented. Use of this article does not create an attorney-client relationship, and The Hoggatt Law Firm, PLLC does not represent you unless and until we are expressly retained in writing.