While the Brady Bunch featured the no doubt best known blended family in the American cultural psyche, we never saw addressed the challenges that rise in connection with estate planning, especially for a blended family of a presumably high-earning architect and a homemaker. In fact, the challenges in those circumstances need to be recognized and addressed.
All families in estate planning need to consider a variety of issues, including state laws that may be difficult to override, individual versus marital assets, and varying needs of children. In a blended family these issues are further complicated by the fact that either or both of the spouses may have children from a prior marriage/relationship, and they may have children together. Second marriages also have the potential to trigger changes to a new spouse’s access to assets that they are accustomed to from prior relationships.
Timing can also be a significant issue. The children of the 60-year-old who marries a 40 year-old may find that a portion of an anticipated inheritance will have to await the passing of the now 40-year-old new spouse.
Some couples may find it appropriate to enter into a prenuptial agreement identifying their respective assets, agreeing as to what will be shared between themselves and what will be kept as separate property that may be disposed of as they see fit. Absent a prenuptial agreement these issues need to be considered in post-marriage estate planning. In fact, absent a prenuptial agreement—or a postnuptial agreement, which in Kentucky courts would be viewed less favorably than a prenuptial agreement—even the best drafted estate planning documents will be subject to the surviving spouse’s statutory elective rights.
Let’s consider an illustration of the potential challenges. Imagine Mr. Brady, with his three sons, came into his marriage to Mrs. Brady with significant assets from his time as an architect. Mrs. Brady, with her three girls, entered the marriage with few assets after caring for her family for many years; unfortunately, her husband’s life insurance policy was not substantial, but it did pay off the mortgage on what had been their home. Is Mr. Brady comfortable covering the expenses of the girls’ higher education, or does he want to preserve his assets for the exclusive use of his sons? Have they decided as to the application of her house’s sale proceeds? Mrs. Brady took on a role as a freelance writer in the second season of the show – did she preserve her earnings from that endeavor for herself or were they shared among the household?
Now imagine the Mr. and Mrs. Brady had a child of their own. Is that seventh Brady sibling entitled to different assets or inheritance than their siblings when Mrs. Brady’s parents pass away and leave their grandchildren the family fortune?
Just as it is for everyone, it is important to keep track of “transfer on death” provisions that apply to many retirement plans, investment accounts, and life insurance policies. In the course of general financial maintenance and estate planning, it is important to identify these assets and ensure that the appropriate TOD designations (in some states in with respect to certain accounts, these may require spousal consent) are in place, and that these designations are coordinated with the clients’ overall estate planning goals. Regular review of estate planning documents is key to ensuring loved ones are left with clear direction and smooth transitions after a death in the family, blended or otherwise.
Every circumstance is different, and that is especially true in blended families with different combinations of ages, assets, and children. Different combinations of joint-ownership, transfer on death, and trust arrangements can be utilized to effect different needs and objectives, and the estate planning group at SKO is ready to assist you in working through these challenges.
