Bypass Bitterness in Blended Families

With many baby boomers on their second or third marriages, the already touchy matter of who will inherit what can become a colossal challenge.  In the U.S. today, two out of five first marriages end in divorce, and about half of divorced people marry at least one more time.  Among couples that have married twice, about 65 percent include children from prior marriages.  This can complicate the transfer of brokerage accounts, real estate, and personal assets.  Add in tensions over divorces and rifts between stepchildren, and the situation is ripe for legal battles.   

An easy way to avoid feuds and lawsuits between a surviving spouse and stepchildren is to share your estate plan before you pass away. “It helps to say, ‘This is the plan I want followed’ and face whatever conflicts arise then.”  Below are a few ways blended families can keep the peace when dividing wealth:

• Fairness. Minimizing bitterness between your children and their stepparent is possible if you divide your estate so that your children and your spouse each get something when you die. 
• Trusts. A thoughtfully crafted trust can increase the odds heirs will not be at each other’s throats.  For example, a QTIP trust directs all the annual income from your estate to your surviving spouse, but also lets you specify who, in the event of his or her death, gets the remaining funds. 
• Keeping Current. If you have remarried, it is important to update beneficiaries on accounts.  It is typical for people to put off updating documents or mistakenly think a divorce agreement is all they need.

See Carol Hymowitz, Ways that Blended Families Can Avoid a Wealth of Bitterness, Bloomberg, Nov. 10, 2014.