Q: My mom and stepfather each have children from previous marriages. Does this affect their estate planning?
A: We no longer live in a time where the “typical” family involves two spouses and joint children. Blended families and other non-traditional family structures are becoming increasingly more common. Whether it’s a third marriage with shared children from previous relationships, a long-term partnership with joint and pre-relationship children, or single-by-choice parents, the complexities involved in these family dynamics require estate planning tailored to each family.
Before the growth of the modern family, estate planning was relatively simple. Couples would create “sweetheart wills,” which leave assets to each other, and after the death of the surviving spouse, to their children. However, a sweetheart will does not adequately provide for individuals who have children from previous relationships or want to provide for beneficiaries besides the spouse.
When preparing an estate plan for the modern family, it is important to confirm who the intended beneficiaries are under all cases. Here are some common scenarios where poor planning leads to unintended consequences:
Joe has three children from a previous relationship and marries Cindy, who does not have children. Joe executes a Will giving Cindy all his assets upon his death, if she survives him, otherwise to his kids. Cindy also executes a Will naming her sister as her primary beneficiary. If Joe dies first, all his assets pass to Cindy, which will then pass to her sister under her Will. Under this scenario, Joe has inadvertently disinherited his children, which was likely not his intent.
Ayanna and Devin are married, but Ayanna has two children from a previous relationship that she wants to inherit her assets. Although her Will names her children as sole beneficiaries, Devin has a right of election to claim one-third (1/3) of Ayanna’s estate under New York law. Having Devin sign a waiver of the right of the election could prevent one-third of Ayanna’s estate from passing to Devin.
Michele and Emily are married with no children. Emily names her siblings as beneficiaries under her revocable trust. However, Emily requires homecare Medicaid and transfers all assets from her revocable trust to Michele to qualify. Michele’s estate planning documents distribute her assets to charities. Michele is now the owner of all assets, and Emily’s siblings will no longer receive an inheritance at Emily’s death. Irrevocable trust planning could have been a better alternative for Medicaid eligibility, while still providing for Emily’s siblings at death
John and Adam execute estate planning documents naming each other as primary beneficiaries under each other’s documents. However, all Adam’s financial accounts name his nieces and nephews as direct beneficiaries under the accounts. Without revising those beneficiary designations, all Adam’s financial accounts will pass to his nieces and nephews instead of John.
Jessica and Brian are life partners. They each create Wills providing for each other. Brian has an estranged son, Jason. When Brian dies, Jason receives notice of the probate of the Will, as required by law. Jason contests the Will causing major delays in the probate proceeding. A trust for Brian would have been a better alternative to avoid the probate process and the Will contest.
These are some of the many reasons why having the right estate plan matters.
Families come in all different shapes and sizes. It is important to meet with an Estate Planning and Elder Law attorney to discuss your specific goals and come up with a creative, comprehensive way to create the best estate plan for you.
Michal Lipshitz, Esq. is an attorney at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Elder Law. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.