Dykema Law

Estate Planning and the Blended Family

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The Reality 

We all know the statistics:  50% of all marriages will end in divorce.  Many of these divorces (75% of men and women who divorce under the age of 45) will lead to second marriages and create blended families.   Divorce statistic show that divorced men and women with children tend to remarry more quickly than their counterpart without children.

Putting everything in perspective 

Many estate plans overlook or fail to consider estate planning issues for blended families.  Issues that are often overlooked are disinheriting your ex-spouse, protecting your own children, providing for your new spouse, and considering the children of your new spouse. Top these issues off with the concern of tax savings and you can the need for careful consideration.  

What to do with Your Ex-Spouse

First and foremost on most divorce couple's minds is:  Will my ex-spouse inherit any of your money?  Many divorced adults believe that they are protected as Michigan law automatically terminates an ex-spouses interest in your assets.  Maybe, maybe not!  What if your ex-spouse is designated in an employer provided life insurance policy?  If you fail to act and change the beneficiary designation there is federal law which holds that the insurance policy should be administered according to federal law.  Federal law would provide that the ex-spouse is the beneficiary, contrary to the state law.

Let's take it a step further 

Without proper estate planning, in most cases, your ex-spouse (as surviving parent/guardian) would, likely, be appointed by the probate court to manage the inheritance you might leave to your minor children. So if you die without estate planning, before your ex-spouse, any inheritance you leave to your children will most likely be controlled by your ex-spouse.

One more painful step...

Assume that your children die before your ex-spouse.  Who will inherit the assets your children received when you died?  The answer is your child's next of kin--your ex-spouse. 

Your New Spouse

Now you're remarried and have a new spouse.  How does your new fit into the equation.  Let's assume that you don't have a prenuptial agreement which provides for the separate maintenance of assets.  Let's also assume that your new spouse is the beneficiary on your life insurance, bank accounts, etc.  Now, assume that you predecease you new spouse.  The result of this scenario is that your biological children could be forever disinherited.  This goes on and on, for example, upon the death of your new spouse, most likely all the "blended assets"  will be inherited by your step children, a replacement spouse, and subsequent children.

There is no right or wrong when it comes to estate planning.  There is only "wrong" when you fail to plan.  The new spouses must address planning so that they can carefully craft documents that will meet their estate planning needs as it relates to their newly created family dynamics.

YOU CAN PROTECT YOURSELF, YOUR NEW SPOUSE, AND ALL THE CHILDREN OF YOUR NEW FAMILY.  YOU JUST NEED TO PLAN.

Call Dykema Law Offices to discuss your estate planning needs.