Life expectancy in Texas and throughout the United States has increased significantly. This, combined with the high rate of divorce in the state, means that blended families are becoming increasingly common. An additional consideration for those who get married more than once is effective estate planning.
Most parents want their own children’s inheritance and surviving spouses’ well-being to be guaranteed after they pass on. However, a new marriage can sometimes complicate how assets are divided after a spouse’s death, particularly if there has been no estate plan made for the second marriage. Knowing how to divide assets in subsequent marriages can be complicated.
Hiring an estate planning attorney is the easiest way to ensure that the surviving spouse and your own children do not lose out on their inheritance after you pass away. An attorney can clarify confusing matters and ensure that your wishes are respected after death.
The Love DuCote Law Firm LLC
The estate planning lawyers at The Love DuCote Law Firm LLC can help you divide assets in a blended family to ensure that everyone is treated fairly. Our lawyers want to ensure that your family members benefit from your inheritance and that your estate planning goals are satisfied.
Our team of estate lawyers has over 40 years of combined experience in multiple practice areas, including family law, estate division, and asset protection. We understand that family dynamics can get complicated, particularly when it involves children from a previous marriage and stepchildren.
We want to take the stress out of dividing assets and ensure that your family members are looked after while respecting your wishes. An estate planning lawyer from our firm can help you write a new will, set up trusts for your own children or surviving spouse, and organize your life estate and retirement accounts for after you pass on.
Call our law firm today at 832-843-1691 to begin estate planning with our lawyers.
What is a Blended Family?
A blended family is when two people come together with children from previous marriages or relationships and combine these family members together. Blended families can result from the death of one spouse in a prior marriage, divorce, or separation. Blended families are becoming more common than a traditional family situation, which usually involves one marriage with biological children.
A blended family can be extremely rewarding and challenging for those involved. When there are adult children who have their own lives and independence, it can be significantly easier. However, younger children may find it difficult to accept a step-parent or to create close relationships with the other step-children.
With a second spouse, the division of assets and property becomes more complicated. Often, people expect that their financial accounts will be divided equally among their own children after they die. However, when you get married again, unless you sign a prenuptial agreement, your new spouse is entitled to receive part of your estate. If you did not marry your new partner, your former spouse may still be entitled to part of your estate.
Making Estate Plans in Texas
To make an estate plan in Texas, you must appoint trusted representatives to execute decisions on your behalf. When you die or become incapacitated, you must trust these people to make decisions entirely on your behalf. For this reason, you should ensure that you completely trust the people that you appoint.
It is also a good idea to choose people that can work together and do not have competing interests. If your children and your surviving spouse have a strong relationship, it would be beneficial for one to be the executor and the other to be the trustee, for example.
However, if your children dislike your current spouse, you should choose the person more likely to protect your wishes. You can also appoint an independent decision-maker that does not have any vested interest in your estate, such as a Texas lawyer.
An executor is a person responsible for administering your estate upon death and executing the terms of the Will. With a blended family, your executor must ensure that each beneficiary gets what they are owed, that everything is clarified, and that any arguments between beneficiaries are resolved. Your executor must also pay tax on your behalf, ensure that your funeral is paid for, and help sell your assets.
If you set up a trust in your Will, a trustee is a person who administers this trust after your death. Your trustee should ensure that all beneficiaries are paid what they are owed from the trust and ensure that the assets are invested for the long-term benefits of the beneficiaries.
With blended families, the trustee must also make decisions based on what is in the best interests of your children and your surviving spouse, such as maximizing long-term capital growth or investing to maximize income on your assets.
Common Issues With Estate Planning After One Spouse Dies
When there is no proper estate planning done in a blended family, many issues arise. Because blended families can be quite complicated with unusual dynamics, the law does not have the provisions to standardize the division of assets. When there is more than one spouse involved in an estate, biological children, and stepchildren, it is common for at least one party to lose out.
Ex-Spouse Gets Everything
Failing to make a new Will after your second marriage can lead to your first spouse getting all the assets. When a spouse passes suddenly without having updated their Will, their current spouse is often shocked to find that the ex-spouse is the beneficiary of the 401(k) retirement accounts, the life insurance policies, and other family heirlooms that were not re-designated.
A divorce or dissolution of a marriage does not automatically mean that your former spouse loses their entitlements to your entire estate. If you named them as the primary beneficiary of your estate and other financial accounts, they will still receive the assets after your death.
Our lawyers have seen many cases where the second spouse loses all their partner’s assets after being married for many years because they forgot to change their Will. If you do not have a good relationship with your former spouse, you do not want any of your money and assets going to them. If your children are not your secondary beneficiaries, your family could be left with nothing after your death and your ex-spouse with everything.
Other Spouse’s Children Get Nothing
When there has been no estate planning done after the first spouse dies or after the second marriage, the step-children usually lose out. Step-children do not have any entitlements to your estate unless you specifically provide for this in your Will, trust, or life insurance policy. Depending on your situation, you may want to leave your stepchildren some assets or not.
To consider whether including them in your Will is a good option, you should think about:
- The relationship you have with your spouse’s children.
- Whether you provide financially to these children.
- Whether it makes sense to divide the total estate between all children involved in the blended family.
- Whether your surviving spouse is also including your biological children in their Will and Testament.
- Whether your biological children would feel hurt if you afforded children from the second marriage the same amount of assets.
If you want your stepchildren to benefit from your Will and elective estate, then you must ensure to update your Will to include them in it. Failing to do this can lead to them getting nothing, even after your surviving spouse’s death.
Stepchildren Get Family Heirlooms
Sometimes, a person may not want the children of their new spouse to get anything. If you do not have a good relationship with your stepchildren or simply do not want them to benefit from your estate, you must ensure that you make provisions for this in your will.
Although stepchildren have no entitlements in your will, they may get some of your family trusts and Will indirectly, through your new spouse. Your new spouse may leave their children your estate and life insurance policies in their Will or give your assets as a gift to them.
To prevent a situation like this, you will need to set up a “marriage bypass trust” or a similar provision that prevents your new spouse’s children from getting your assets. Important estate planning considerations like this should be discussed with an experienced estate plan attorney.
Children From a Previous Marriage Get Nothing
Sometimes, biological children from a previous marriage lose out on your estate because of your surviving spouse. If you leave everything to your surviving spouse or do not change the will, your spouse will become the executor of your estate. They may decide after your death to change the will to exclude your children from the previous marriage.
Although you may not expect it, it happens often. Particularly when the surviving spouse and your children do not stay in contact for years after your death. Adding a trust or a provision to ensure they are included can prevent this from happening.
How To Divide Assets in a Blended Family in Texas
The best way to avoid any major issues from arising after a death in a blended family is to make a solid estate plan early on. Although we all hope to live for a long time, none of us knows when our time will come. If you or your spouse suddenly passes, the last thing you want is to leave your family in a difficult situation where the division of assets has not been clarified.
No serious estate planning should be done without the help of an experienced attorney. Your attorney can guide you on what will work best for your unique family situation, and help ensure that your wishes are properly executed. Some things you should do to divide assets in blended families include:
Make a New Will
Most people who get remarried decide that their new spouse should receive their entire estate. Unless you have a close relationship with your former spouse, you will need to make a new Will to accommodate the changes in your marriage situation. You should make changes to update not only your Will but also your 401(k) retirement plan, life insurance, and any property and assets that you have.
If possible, ensure to name a neutral trustee that you can trust with the dividing of your assets after you pass. If your trustee is the primary beneficiary of your Will, you need to know for sure that you can trust them with the dividing of the assets equally among your children and not changing the Will to deny your adult children assets.
Make Beneficiary Designations
In blended families, it is important to specify who benefits from what. If you got married again later on in life, you probably have a lot more assets than in your first marriage. Most second marriages do not involve spouses with equal financial situations. If you come into a second marriage with many assets, you may not want to give all the assets to your surviving spouse.
When you have biological children from previous marriages or relationships, you may want to give them most of your assets earned before the current marriage. You can specify in your Will and Testament that you want to give one-quarter of your estate to your surviving spouse and the other three-quarters to your three children, for example.
You may also have one child with a physical or mental disability that you want to give more to than the other children involved. Or, you have one child that has a drug addiction or gambling addiction problem that you do not want them to squander your asset with. In these situations, it is important to specify that not all heirs will be treated equally and layout beneficiary designations.
It is important to also clearly identify your beneficiaries. Do not use vague language in your Will, such as “to my children”. Your lawyer can help you specify your beneficiaries by adding names and clearly identifying who is entitled to what.
Set Up Trusts
Setting up trusts is a good way to ensure that your wishes are met after your death. A few types of trusts are used in cases with blended families. One of these is a Trust QTIP or Qualified Terminable Interest Property. This type of trust allows a person to provide for a surviving spouse while they are alive and then distribute the remaining assets to the children involved.
This type of trust ensures that your surviving spouse does not struggle and is looked after while they are alive and that your children also receive the benefits of your trust when your spouse passes. This is an irrevocable trust that is quite popular in blended families when one person has children from another marriage.
Unlike a marital trust, a Trust QTIP does not pass control to the surviving spouse over how the assets are distributed. Distributions must be made at least annually with a QTIP, and your surviving spouse cannot change the trust. With a marital trust, your surviving spouse can decide to change the beneficiaries of the trust and has total control over it once you pass on.
Revocable Living Trust
A revocable living trust is a trust that exists while you are alive and gets passed on to another person after your death. Some people choose to use a living trust rather than a traditional Will as it gives them more control over their assets. It is much easier to make changes to a revocable living trust and you can continue to benefit from the assets while you are living.
If you have property outside the state of Texas, a revocable living trust can be a good option. Also, the contents and beneficiaries of a living trust are kept private, unlike a Will. So, this option gives people and their families more privacy about where their money comes from. If you do not want your former spouse to know about the contents of your trust and assets after your death, this can be a favorable option.
An example of a revocable living trust is an AB trust. This trust is split between two spouses, A and B. When one or both of the spouses die, the trust is divided into Trust A and Trust B. Trust A holds one spouse’s half of the estate and Trust B holds the other spouse’s half. The surviving spouse usually controls both halves of the trust however, they have less control over the deceased’s half. This means that they cannot change the beneficiaries of their deceased spouse’s trust.
Gifts Before Death
Because blended families can get quite complicated after death, sometimes it is easier to give out gifts and assets before you pass on. This way, you can ensure that your children and desired heirs benefit in the way that you want. Under federal law, you can give up to $15,000 to a person without paying federal gift tax or getting into trouble with the Internal Revenue Service (IRS).
If you have three adult children, you can give each of these children $15,000 without worrying about them having to pay taxes. If your adult children have spouses, you can gift their spouse $15,000 each as well. Your current spouse can also gift your children $15,000 from your joint accounts. So, you can give each of your children $30,000 and each of their spouses $30,000 before you pass on.
This can ensure that all heirs equally receive the money that you want for them and that nobody loses out because of bad estate planning.
Do I Need a Prenuptial Agreement?
When you move on from a previous relationship, because of death or divorce, and meet someone else that you want to marry, you may be hesitant about discussing financials. A prenuptial agreement is an agreement signed before marriage setting out a financial plan and determining how the assets should be distributed if one spouse passes or if they decide to divorce.
When you marry again later in life, you often have assets with more cash value, obligations like child support and spousal maintenance, and assets that have already been divided in a previous marriage. Signing a prenuptial agreement in a new marriage can help couples understand how their finances will be divided during and after the marriage, and whether they want their new spouse to benefit from their assets.
A prenuptial agreement can make things a lot less confusing when one person dies. Married couples that clarify their finances from the beginning can make it easier on themselves in the event of death or future divorce and can lessen the burden on their children when dividing up the assets.
What Happens If I Do Not Prepare?
If you do not prepare a plan that fully executes your wishes for your estate, Texas intestacy law will apply. This means that your assets will be divided according to the standard procedures set out in law. Your surviving spouse will be entitled to just half of your estate and your biological children will receive the other half to be divided among them equally. This includes the family home and any assets that you share with your current partner.
Any children involved in your current marriage that are not biological will not benefit from your estate. If your ex-spouse is still included in your retirement plan or life insurance policies, your surviving spouse may also not receive anything from these. If your original plan was to leave everything to the surviving spouse, because all of your children are grown up and financially independent, but you did not prepare for this, then your surviving spouse will lose out.
Hiring an Estate Planning Attorney in Texas
Dividing assets in a blended family can be extremely complicated. When there are lots of family members involved with competing interests, it is difficult to know what to do. Trying to understand the complexities of estate division is difficult, particularly if you have no legal background and are in a blended family.
Hiring an estate planning attorney can help ensure that your estate goes to the right hands after your death. An attorney can help you by advising you on how estate plan laws work in Texas, assessing what is the best option for your family, helping you write up a Will and Testament and trusts, reorganizing your retirement plans from a previous relationship, and appointing a Will executor and a trustee.
Your attorney can also help distribute your assets and execute your Will and trust after your death. If there are competing interests in your family, you can assign your attorney as an independent decision-maker in relation to your assets. Having an attorney by your side can help prevent arguments between your blended family and help ensure that everyone’s interests are protected.
Contact The Love DuCote Law Firm LLC Today!
The laws on dividing assets and estates can be quite complicated. For blended families, where there are biological children, stepchildren, and previous marriages with prior obligations, the division of assets can get quite complicated. Most people want to ensure that their children and surviving spouse are looked after following their death. However, if you do not take steps to ensure this before you pass on, it can lead to a tricky situation.
The Love DuCote Law Firm LLC has been helping Texas citizens with family law and estate division matters for many years. Our team of Texas attorneys understands that Wills, trusts, and estates can be quite complicated and can cause major rifts in a family. Our law firm wants to help you avoid arguments over inheritance after death and ensure that those who are important to you benefit.
The lawyers in our law firm have won multiple awards and recognitions for their experience and accomplishments, including AVVO ratings of 10.0 and recognition by the State Bar of Texas. We have the unique skills that you need to ensure your family’s best interests are protected after a divorce or death.
Call our law firm today to arrange a consultation at 832-843-1691.