Every family has its unique situation — and if you’re a stepparent, estate planning can get tricky. How do you handle splitting up assets between half-siblings or stepsiblings fairly? What about estranged children from a previous marriage?
Here are some estate planning tips for stepparents who want to ensure their blended families receive a fair inheritance.
Review your current estate plans
Estate planning is an ongoing process. As life events occur, review your estate plan to ensure your executor will distribute your assets lawfully and properly. A good rule of thumb is to review an estate plan every three to five years, but especially when a major life event happens — such as a divorce, remarriage, birth of a new child or grandchild, the marriage or divorce of one of your children, an unexpected medical diagnosis, death of a loved one or child.
While Virginia statute provides that entry of a final order of divorce effectively invalidates a former spouse from inheriting under an existing Will or serving as an executor (or as attorney-in-fact under a power of attorney), it’s still very important to do more than rely on a Virginia statute when it comes to protecting your estate plan. Whenever you’re facing a divorce or remarriage, it is critical to make sure you update your Will, trust, powers of attorney, payable-on-death accounts, and any other estate planning documents that may mention your ex-spouse or children from your former marriage. If you neglect to update your estate plan after a divorce, the laws governing probate in Virginia may end up passing your assets to persons you never intended or omitting persons you wished to inherit –completely contrary to your actual wishes.
As you update your estate plan as a result of remarriage, it’s a good idea to think about where your current spouse and any stepchildren fit in. In Virginia, absent a signed premarital or post-marital agreement, along with a properly drafted Will, your new spouse will inherit at least one-third of your estate by default, and any children you have from your former marriage will inherit the other two-thirds. In addition, unless you specifically name your stepchildren in your plans or legally adopt them, they will not inherit from you – which may, again, be contrary to your actual wishes if you would prefer to have your stepchildren inherit from you.
Be specific
An estate plan is only as good as its accuracy. You will not be around to clarify wording or settle disputes, so you must ensure the proper distribution of assets.
Review a list of individuals that will benefit from your estate and a list of individuals you do NOT want to benefit from. To avoid disputes, be intentional and specific about how assets are divided.
Consider a trust
Sometimes a simple Will is not enough, especially in a blended family. You might need to consider a trust. A trust is a legal arrangement between two types of parties — the one who sets up the trust (called a “settlor” or a “trustor” or a “grantor”) and the one who will manage the trust assets (called a “trustee”).
Like a Will, the trust can leave assets to beneficiaries. A trust is unique in the control it provides the person creating a trust to coordinate how the funds will be allocated and even plan for contingencies should a named beneficiary of the trust die before receiving their trust assets. Trusts are also flexible for future planning, and you can freely add additional assets to or remove assets from the trust as well as update the named trustees and beneficiaries – along with, if needed, setting ages for direct distributions to beneficiaries too young to immediately inherit from you at your death.
Take advantage of lifetime gifting
Problems can arise even when you have previously executed a comprehensive set of estate planning documents; particularly given the significant changes to even the tax laws governing estates. To avoid possible contestation after your death, it may even be best to consider leaving a letter of explanation for beneficiary decisions in your estate planning documents. If you are afraid of disputes erupting from large assets, you might also consider gifting assets to individuals while you are still alive — especially for objects of sentimental value or making sure to name that individual as your direct, pay-on-death, or transfer-on-death beneficiary for a financial asset or real estate, so that it passes directly them outside of any will or trust.
Consult an experienced estate planning attorney
Estate planning is a complicated endeavor for a blended family. Without legal help, you run the risk of making costly mistakes while creating an estate plan or managing a trust. Having an attorney help you develop and manage your estate plans is the best way to ensure that your estate is fairly distributed to the people that you love.
Take the guesswork out of estate planning by contacting one of Northern Virginia’s most-trusted estate planning attorneys. The Law Office of Patricia E. Tichenor, P.L.L.C. will consult and guide you through the process of distributing your estate to the ones you love most. Schedule your free consultation with us today.
