California Blended Families Face Unique Challenges When Developing Comprehensive Estate Plans

Creating a successful estate plan for blended families can be extremely complicated for a number of reasons.

First, it is often challenging for spouses to identify and agree on who should be the named beneficiaries.  For example, a spouse who has children from a prior marriage may want those children to share in his or her estate at death.  Yet, if there is a tense relationship between the stepparent and the children from the prior marriage, the stepparent may resent or discourage naming those children as beneficiaries.

One of the most important tasks for spouses of a blended family is to reach an agreement on their priorities.  For most spouses with modest estates, the primary goal of the estate plan is to provide for the care of the widowed spouse and minor children from the current marriage.  The decedent’s older children are often considered secondarily.  However, if the spouses have a larger estate, their goals may focus on a more equal division of assets between surviving family members.

In order to meet the estate planning needs of a blended family, a “bypass trust” may be used.  A bypass trust is an irrevocable trust that is funded with the deceased spouse’s separate property and his/her share of the community property.  The surviving spouse would be the lifetime beneficiary of this trust with the deceased spouse’s children often designated as the remainder beneficiaries.  Essentially, the proceeds of the bypass trust would be available to meet the lifetime needs of the surviving spouse while ensuring that the deceased spouse’s remaining property is ultimately distributed as the deceased spouse wanted.  However, a bypass trust is not appropriate for every blended family as the surviving spouse may deplete the trust assets during his/her lifetime and leave nothing for the stepchildren.

For more information on what types of estate planning instruments can best meet the needs of your blended family, please contact Bay Area wills and trusts attorneys at Lonich Patton Erlich Policastri.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.