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Estate Planning for Blended Families

07.06.09 written by

Unfortunately, divorce is a common part of life today. As a result, more and more people have blended families. Blended families are families where the husband has children from a prior marriage and/or the wife has children from a prior marriage. Sometimes the current husband and wife may also have children together as well. Due to these complicated circumstances, it is very important that individuals with blended families understand the law and know their options when planning their estate.

The majority of the time, when a husband and wife with a blended family come into the office, they just want a simple will where they leave all of their assets to the survivor of them and then when the survivor passes away one-half of their assets pass to the husband’s children and the remaining one-half of the assets pass to the wife’s children. It is at that point in the meeting that I explain the issues which could arise as a result of this “simple” estate plan. For example, if husband passes away and wife is the beneficiary of all of the assets, there is nothing legally to prevent the wife from redoing her will and leaving out the husband’s children. When this is explained to the clients, the clients always say that they trust the other spouse to do the “right” thing or that neither of them would do anything to hurt the step children. However, it is my experience that cutting out the step children happens more often than you may think. On the death of the first spouse with a blended family, the relationship between the surviving spouse and the step children often changes. 

Sometimes, the surviving spouse and step children do not spend as much time with each other as they did before and they grow apart. As a result, the surviving spouse does not feel that the step children “deserve” to receive anything from the survivor’s estate. Thus, the survivor executes a new will and disinherits the step children. Therefore, clients with blended families need to be aware of the alternatives that exist to make sure the step children are not disinherited.

One alternative is for the husband and wife to establish a joint trust in which all of the couple’s assets are owned by the trust. Upon the death of the first spouse, the surviving spouse has the ability to use the assets for his or her benefit, but the surviving spouse is not able to change the terms of the trust and disinherit the step children. An additional safeguard would be for the surviving spouse and a step child to be co-trustees of the trust. This allows the step child to make sure that the surviving spouse is following the terms of the trust. Trusts are more expensive than simple wills so this alternative is more costly and may not be appropriate for families with a small amount of assets.

Another alternative is that upon the death of the first spouse, that spouse will provide for a specific amount of money or other assets to his or her children to make sure that those children inherit something and do not have to wait until the surviving spouse passes away to inherit. This takes away the ability of the surviving spouse to disinherit the step children completely. Individuals sometimes purchase life insurance and name their children as the beneficiaries as a way to accomplish this. 

Another alternative is to execute a contract to make a will. This is a legal agreement between a husband and wife which states that they will establish a will with certain provisions and that they will not change those provisions even after one of them have passed. Ohio Revised Code Section 2107.04 provides “no agreement to make a will or to make a devise or bequest by will shall be enforceable unless it is in writing.

Such agreement must be signed by the maker or by some other person at such maker’s express direction. If signed by a person other than such maker, the instrument must be subscribed by two or more competent witnesses who heard such maker acknowledge that it was signed at his direction.” This type of agreement is also more complicated than a simple will, but it may provide comfort to the couple that their assets will pass according to their wishes upon the death of the survivor of them. A contract to make a will is less costly and complicated than a trust, but it may provide more protection than a simple will. The potential negative with this type of agreement is that there is not a lot of case law on the subject in Ohio, and therefore the interpretation of this agreement may vary from situation to situation. 
In blended family situations, it may also be wise to name a family member from each of the families as co-fiduciaries. For example, if the husband passes away, then it may be beneficial to name the wife and one of the husband’s children as co-executors. In addition, on powers of attorney, it may be beneficial to name one’s child as a co-attorney-in-fact on the power of attorney with the spouse. This gives the step child a legal right to make decisions with the spouse concerning the family finances and provides a check and balance system. In addition, upon the death of the survivor of the husband and wife, another alternative may be for the couple to name one individual from each of their sides of the family as co-executors. This can be beneficial when naming powers of attorney as well. For example, upon the death of the survivor of a couple, it may be beneficial for one of the wife’s children and one of the husband’s children to be named as a fiduciary so that both sides of the family are aware of what is happening with regards to the assets of the family.

When blended families plan their estates, it is very important for them to understand all of the options available to them. Some clients will accept the potential consequences of using a simple will and some will request more protection and require the use of a trust or a contract to make a will. Please consult your estate planning professional for advice with regards to estate planning for your blended family.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.