The blended family has become more the norm than the exception in our society. As with most second marriages, Amy and I came into our marriage with our own children, our own careers and our own estates. We have experienced the challenges of the blended family.
Typically, a parent in a second marriage has conflicting loyalties. There is the desire to provide for the well being of the second spouse while, often at the same time, there is a felt duty to preserve some part of the estate (especially, of that acquired before the second marriage) for his/her children of the first marriage. This conflict can be especially acute if there is a significant age difference between the spouses. Thus, the older spouse could provide a trust for the life of his/her spouse, but this could delay significantly the benefit to the children of the first marriage by many years.
Under the law of most states, including Virginia, a surviving spouse has a statutory right to a percentage of the deceased spouse's estate, no matter what provisions the decedent has made for the surviving spouse upon his/her death. In other words, the surviving spouse may elect rights at law against the provisions of the will. This right of election can result in a major disruption in a well-thought out estate plan.
A key tool in the planning process is the Marital Agreement. In Virginia, as with most states, this can be entered before or after marriage. The purpose is to address and resolve the possible legal issues that can arise from the marriage. Many people consider such an agreement distasteful because it typically addresses the possibility of divorce, an awkward subject for two people planning for - or already in - a marriage. While most lawyers would recommend including provisions pertaining to a possible dissolution of the marriage, the agreement does not need to cover that topic. Rather, it can - and should - deal with the rights of the surviving spouse upon the death of the first spouse to die. This would include the financial arrangements to be provided in each spouse's estate for the survivor and the right to serve as executor and/or trustee of the decedent spouse's estate and trust. The marital agreement can also deal with the right of the spouse to be the agent for the other under a power of attorney or advance medical directive. Such provisions can eliminate potential conflicts among the children of each spouse and the step-parent.
Creative planning and honest communication can avoid painful, disruptive family conflicts. Consider a factual situation: The surviving wife discovers that, upon the sudden death of her husband, his adult children of the first marriage are appointed to serve as executors of the estate and as trustees for the trust established for the benefit of the surviving wife. In other words, the step-mother must apply to her step-children for disbursements from the trust, and the step-children inherit what remains from the trust after the death of their step-mother. This situation is destined to create on-going tension. Creative alternatives exist which could have avoided such a potentially painful situation.
Planning in the context of the blended family can evolve as circumstances change, as, for example, children graduate from college, an inheritance is received, the residence is downsized, a spouse retires. Thoughtful planning can accommodate life changes and avoid disruptive family conflicts.
From "Amy and Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.
The foregoing article contains general legal information only and is not intended to convey legal advice. For legal advice regarding estate planning, the reader should contact his/her lawyer.
Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).
Amy V. Smith Wealth Management, LLC is an independent firm. Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC. Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James. Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice. Dan Smith is not affiliated with Raymond James.