Blended families have outpaced the traditional nuclear family in the U.S. In fact, less than half of the children in the U.S. are living in a family with two married parents in their first marriage.

Blended families are more common than ever. A blended family is a family made up of a couple and their children from their previous marriage(s).

Currently, 3 out of every 4 Americans who become divorced remarry, and 65% of all remarriages in the United States involve blended families in which a spouse brings in children from another marriage on at least one side.

It is now almost as typical for a child to live with a step-parent than in a traditional two-family home. So, how can you plan Inheritance in a Blended family? You will get some effective tips in this article.

• How does a Will Work in a Blended Family?
• How do Blended Families Handle Wills?
• How do you Split Finances in a Blended Family?
• Why are Blended Families so Hard?
• 3 Things you Should Know about a Blended Family
• 6 Inheritance Mistakes to Avoid in a Blended Family

How does a Will Work in a Blended Family?

Some of the hardest Wills to draft are those for persons with “blended families.” A “blended family” is a family where one or both spouses each have children from a prior marriage.

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In a Will for a traditional family (one where the children are children of both spouses), most Wills will leave all assets to the surviving spouse and upon the death of the surviving spouse to their common children.

However, using the same distribution scheme for a blended family may not always work. The issue arises when one of the spouses passes away and leaves all of their assets to the surviving spouse.

What happens if the surviving spouse then changes their will to exclude the children of the predeceased spouse? Below is an example.

For example, Harry Husband, who has three children from a prior marriage, marries Wilma Wife, who has two children from a prior marriage. Harry and Wilma have Wills prepared which leave all of their assets to each other and then to the children in equal shares.

Harry dies and all of his assets pass to Wilma. Wilma then decides to change her Will to leave all of the combined assets to her two children, thus cutting out Harry’s three children from their father’s inheritance.

Upon Wilma’s death, Harry’s children will not be happy to learn that they are inheriting nothing from their father.

What could Harry have done to have prevented this? First, Harry could have left some portion of his assets directly to his children upon his death. For example, he could have stated in his Will that 50% of his assets go directly to his children and the remaining 50% be left to Wilma.

In this way, his children would have inherited their share at the time Harry dies guaranteeing their inheritance. The problem with this method is that Wilma may not be able to continue to live receiving only 50% of Harry’s assets.

Another alternative would be that Harry could have left his assets in a trust created in his Will for Wilma’s support during her life and upon her death the remaining balance, if any, to Harry’s children.

In this way, Harry could have provided for his wife during her life and his children would inherit any monies left over after Wilma dies. The drawback to this method is that it requires that a trust be established in the Will which creates a more complicated Will and administration after Harry dies.

Finally, Harry and Wilma could have prepared what is referred to as “mutual” or “contract” Wills. These are Wills that, once made, cannot be changed without the written consent of both parties.

Thus, once Harry died, Wilma could not change her Will to disinherit Harry’s children, because Harry did not consent to that change. Even this method is not perfect because this may prevent Wilma from making a legitimate change to her Will after Harry dies.

Persons with blended families should talk to an estate planning attorney about how they wish to provide for both their children from a prior marriage and their current spouse in making a Will.

How do Blended Families Handle Wills?

Real life blended families, however, aren’t always close and don’t always share the same goals and values. When a parent passes away or becomes incapacitated, there’s potential for conflict between the surviving spouse and children, and one or all of the parties may feel left out.

The key to minimizing these issues is a well-thought-out estate plan. Here are some strategies that blended families can use.

Setting up a Trust

Married people commonly leave everything to each other in their wills. If you pass away first, your spouse will own all your property outright.

The issue for blended families is that your husband or wife may, over time, decide not to leave anything to your children from a previous relationship. It’s easy to imagine Gloria remarrying, living 40 more years, and leaving her estate to her husband and two children — not to Jay’s adult kids whom she hasn’t seen in decades.

One way to provide for your spouse without leaving out your kids is to place some or all of your money and property in a trust that your spouse can use during his or her lifetime. Then, when your spouse passes away, everything in the trust can go to your children.

• You must choose someone to be trustee of the trust after you die. Your spouse and kids may have competing goals that will lead to family conflict. Many experts recommend picking a neutral trustee, such as a bank.
• If you set up a trust for a young spouse like Gloria, your children probably won’t receive anything for many years and, unless your estate is quite large, there may be nothing left. You may want to designate your children as beneficiaries of your retirement accounts or life insurance policies to give them an immediate inheritance.

Retirement Accounts and Life Insurance

Life insurance is another way to provide for a complex web of family members. You can, for example, leave most of your money and property to your spouse, but provide for your children by taking out a life insurance policy that names them as the beneficiaries.

Life insurance and retirement accounts like IRAs and 401(k)s aren’t passed down through your will, but instead go directly to the primary beneficiary you have named — even if your will says otherwise.

If you’re divorced, make sure you’ve updated your beneficiaries so your retirement savings don’t end up in the hands of your ex.

Living Wills and Powers of Attorney

As part of any complete estate plan, you should have a document explaining your wishes if you become terminally ill (which i known as a living will), a healthcare power of attorney designating someone to make medical decisions on your behalf if you are unable to do so, and a durable power of attorney naming someone to handle your financial affairs when you no longer can.

People often name their spouse, but in a blended family this sometimes leads to hurt feelings and arguments over what mom or dad would have wanted.

Whether your family is blended or not, it’s always a good idea to choose someone who is level-headed and able to get along with other family members. And, to prevent surprises, let everyone know about your plans and wishes in advance.

What If I Don’t Do Anything?

If you don’t make any estate plan, the money and property that would ordinarily be handed down through your will will be divided according to your state’s intestacy laws.

This means that you won’t have any say over how your property is split among your spouse and your children. And it’s likely that your stepchildren won’t inherit anything.

If your family looks more like “Modern Family” than “Leave It to Beaver,” then a blended family estate plan can provide for both your spouse and your children, while also minimizing opportunities for conflict and stress after you’re gone.

How do you Split Finances in a Blended Family?

Second marriages can bring about a whole new set of financial challenges, and one of the most crucial is figuring out how to split finances in a blended family.

If both the spouses come from different income brackets, it is highly probable that they are used to handling money in different ways especially when it comes to their children.

Even if the merging families are from the same background both the parents may have different philosophies regarding allowances, chores, and saving strategy.

Furthermore, as a single parent, you may have gotten used to making financial decisions without consulting anyone.

Plus there is a chance that one or both the parties may bring financial obligations and debts with them.

1. Discuss your Finances before Getting Married

It is best for couples to talk about finances before getting married. Besides, discuss how new spouses and children will be protected financially.  

Thus when you are about to engage in a blended family arrangement communicating a financial plan with your spouse helps to ensure that you both are on the same page and are sure to spend a successful life together.   

2. Create and Stick to a Budget

Prioritize your expenses collectively.

Determine the things that are important and the percentage of each individual’s income that will go towards the household expenses. Make sure that you keep aside a fixed amount for savings before incurring any expenses.

Your priorities will most likely be:

• Mortgage
• Educational costs   
• Auto insurance and maintenance
• Household expenses such as groceries and utilities
• Medical bills

Allocate these expenses fairly by taking each person’s salary into account. Make sure that you decide on the allowance for your children or how will the college-going children spend the money given to them.

Another important consideration that should not be overlooked is if there is any child support to be paid or whether any alimony payments are ongoing. These issues can cause stress at home if they are not discussed freely.

3. Couples Should try to Operate Separate Accounts

As a couple, you should have a joint account so that both of you have access to household expenses, vacations, etc. In addition, both of you should maintain separate accounts also.

These accounts should have a certain percentage of your income as savings or child support paid by the previous spouse to keep the amount separate.  

4. Meet Together as a Family

Merging of two families means a change for everyone. It also means that financial rules are going to change too. Furthermore, as the kids get older family finances and expenses will need to be updated.

You can have family meetings where you can explain the situation to the kids and keep things informal so that kids look forward to such meetings.   

5. Keep your Expenses in Check

Although in a blended family you will be trading your single-parent income status in for a dual family income you cannot live above your means. Make sure that you do not buy anything that you cannot afford.

It can be very tempting to overspend or take on new debt after moving into a higher income group but it vital to remember that blended families usually require larger expenditure.

6. Include Special Events in your Budget

Decide on a budget for holidays or birthdays beforehand as everyone believes their holiday traditions are the best. Set a limit for presents on birthdays and Christmas to make sure that you keep in your budget.

7. Find out your Partners Financial Habits

Statistics show that different habits in money management and financial difficulties are a major cause of divorce. Therefore, it is important to discuss money styles before marriage.

Communicating about spending habits, desires, and money availability before exchanging vows can prevent couples from incurring financial losses and having arguments about money.

Share with each other past financial problems, failures, current amounts of debt, and credit score.

When two families merge into one, there is more to manage and organize than just the wedding and living arrangements. There is a possibility that both the partners have their own financial obligations and may need to split mutual expenses.   

A realistic, well-balanced budget can help reduce money-related stress and make it easier to manage finances.

By communicating the money rules with your spouse and kids, you will have a consistent set of principles effectively outlining how the money should be spent.  

Why are Blended Families so Hard?

Bringing two families together under one roof can be quite challenging. Don’t expect your families to meld together overnight.

According to the American Academy of Child and Adolescent Psychiatry, it can take one to two years for blended families to adjust to the changes. But parents who are proactive in reducing and addressing potential problems can make the adjustment period smoother.

Sibling Rivalry

It’s hard enough for a child to compete with siblings in a nuclear family. When it’s step-siblings that they’re not entirely comfortable with, the problem can magnify.

For a child who hasn’t had to share a parent in a long time, that adjustment period might be a little bit longer.

First, talk to your spouse so you’re on the same page about sibling rivalry. Nothing will work if one of you blames the other person’s biological child for causing the rift. If you have different disciplinary styles, you’re also likely to encounter problems.

Consequences and rewards need to be the same for all the children, no matter how it “used to work” before you two got married.

Next, remember that in some way, your kids may be more like strangers than siblings. So don’t expect everyone to be “one big happy family” in the beginning. It will take a while to get to that point.

If there was a change-up in birth order—that is, one child who was previously the oldest is now stuck in the middle—acknowledge the resentment that could cause.

The previously eldest child probably felt like she had a little bit of power that’s now been taken away from her, while the former baby of the house might feel like he’s lost the attention he once had.

Avoid placing labels on your kids as well. Even positive labels like, “She’s the musician in our family,” and “He’s our star athlete,” can increase tension among family members. Point out that everyone has many skills and talents and it’s healthy to keep exploring new areas of interest.

Everyone Needs Attention

When the number of children increases, as it frequently does in blended families, one or all the children might feel like they’re not getting the attention that they’re used to.

Additionally, blended families sometimes have less time and money for each child’s extracurricular activities or for family outings because of the increase in family size.

As with so many other issues, this problem can be resolved—to the best of its ability, anyway—by working together as a family. Create a set schedule that everyone has weighed in on, with each child choosing an activity within a certain budget throughout the month.

Additionally, both adults should attend each child’s activities, such as sporting games, plays, or concerts, so it doesn’t feel like any child is being favored over another.

Stepparent Discipline Can Be a Challenge

Whereas once the biological parent’s boyfriend or girlfriend was someone to have fun with, now you’re an authority figure—and that might cause a few problems in the household.

A family meeting is in order, but first sit down with your partner to determine your household rules. Take notes and write down your rules and the consequences for breaking those rules.

If you both have children already, there’s a good chance you have somewhat different rules. So it’s important to come together to create the same rules for everyone so that you don’t live like two separate families under one roof.

Identify how you’re going to discipline and what type of consequences you’re going to use. It’s imperative that the two of you present a united front on disciplinary issues.

Sometimes, one parent wants to be the “fun one.” At other times, one parent hopes the new stepparent can lay down the law and get things on track fast.

Remember, kids quickly learn who the “easy target” is when it comes to getting their way, and can grow to be masters of manipulation to pit one adult against another. You Can Have Family Meetings That Will Make Your Household Run Smoothly

Next, call everyone to the table. Take out those notes that you jotted down, and go over them as a family.

Your young ones might have some thoughts that they want to contribute, and having it all written down means that everyone will know exactly what the household rules are, as well as the consequences for breaking those rules.

Explain to the children that, in your house, both adults can enforce consequences to any of the children, and it’s expected that the children will obey the stepparent as they would any other authority figure.

With all of that said, it’s important for stepparents to focus more on building a bond rather than disciplining the children initially. Without a healthy relationship, discipline won’t work. This is especially true with adolescents.

You Feel Like Two Separate Families

You and your new spouse want to feel like one unit that can have fun, share, and rely on each other. The kids aren’t entirely comfortable with each other, though, nor with their new stepparent. It feels like you’re still acting as two families that just happen to live in the same house.

You can’t forge a bond overnight. It will take to time gain shared history, figure out new relationships, and adapt to the new normal.

You can also smooth the transition of going from house to house, a process that might happen regularly if you or your spouse have joint custody.

For example, you could stop for ice cream every time you pick up the kids from the other parent’s house. This little tradition signals to the kids that it’s time to move into a different routine, but in a fun manner.

It’s also important to give kids time to grieve. While a new marriage can be happy, it also signals the end of the previous family dynamics.

And that can be tough for kids who are still struggling to deal with the fact that their biological parents are no longer together or that their time of being an only child with heaps of attention has come to an end.

Despite problems, a blended family is still just that—a family. Although there might be growing pains, squabbles, and a few moments of discipline, everyone will eventually adjust to the new situation. Mistakes will be made, by children and by adults, but everyone will learn from those mistakes.

Eventually, the household will feel less like a mish-mash of families and more like one solid unit.

3 Things you Should Know about a Blended Family

Creating a robust estate plan helps to ensure your wishes are carried out and that all parties get their fair share. While every blended family has its own unique circumstances, there are three main areas to think about:

1. Figuring Out Legal Guardianship

If you pass away without a will, your child’s other parent will typically get full custody.

According to Rebecca Greene Neale, a divorce and estate planning lawyer in Massachusetts, the main exception is if the surviving biological parent had extremely limited visitation rights (think supervised visits or only once-a-month visits).

In that case, the stepparent may be more likely to gain guardianship of the child.

If you and your previous partner are estranged or you want your child to remain with your current spouse, you’ll need to make that clear in your will. Even so, this may not solve everything.

“A parent can appoint their spouse as guardian, but the estranged parent will have to consent to the appointment,” Neale says. “Otherwise, the surviving stepparent will likely have to initiate proceedings after the custodial parent has passed.”

Guardianship is extremely state-specific, so consult a legal professional from your state.

2. Taking Care of the Kids in a Blended Family, Financially

Leaving your estate to your children adds another layer of complexity. It’s important to think about who you’ve designated for your payable on death accounts, but that’s often not enough.

For example, some divorce or custody agreements require that parents maintain a certain amount of life insurance to benefit the children.

The idea behind this rule is to “make up” for any lost caregiving or child support that you would have provided otherwise. In some cases, you might even choose to take out a life insurance policy on your ex-spouse to ensure your child has some protection.

“A minor child cannot inherit life insurance proceeds outright, so there needs to be an appointed trustee for the funds,” Neale says.

That’s an adult whose responsibility it is to act as the legal owner of assets. They control these assets on behalf of a will beneficiary who’s a minor (since a child isn’t allowed to be at the helm). This person is supposed to maintain and manage this money in a responsible way until the child reaches adulthood.

“In blended families it can be tricky to agree on a trustee,” Neale says, “but no matter who it is, the trustee needs to be clearly designated in your will.”

3. Dividing Belongings Among a Blended Family

When it comes to second marriages with stepchildren, you need to make sure that the language in your estate planning is rock solid. Otherwise, it could lead to conflict among your heirs.

Tiffany Hilliard Lipscomb, an expert in the probate process and estate planning, recommends including specific language about each child so that there are no mixups as to who is entitled to certain parts of your estate. That way, there is less of a chance of anyone contesting your will.

This is important because if the language of the will is called into question, the entire document can be thrown out. Then you’d die intestate, meaning without a will.

When you die without a valid will, most states will generally grant most of the estate to your current spouse. The remaining amount will be split amongst children, which can include biological or stepchildren.

This can lead to unintended consequences, such as your estate going to stepchildren (if that isn’t your wish). To make it even more complicated, let’s say your spouse were to pass away shortly after you.

In that case, your spouse’s share would generally go to his or her biological children. That may mean that your own children from a previous union could get left out.

Want to add to the confusion? If you and your partner aren’t married but live in a common law state such as California or Texas, the rules for estate planning may be different.

All this to say: The language in your will needs to clearly define how you want your estate to be divided.

6 Inheritance Mistakes to Avoid in a Blended Family

Here are six planning mistakes for blended families to avoid.

Expecting a single solution

Blended families bring more complexity and trade-offs in estate planning, as partners consider the difficult decisions about distributions and appointments.

There is no one single solution. Blended families and their advisers will generally settle on a strategy in line with the competing responsibilities and goals, and the emotional and financial trade-offs. What that looks like will vary from family to family.

There are simply a lot more options for how and where the wealth should pass.

Not asking about your beneficiaries’ hopes and expectations

It is important to talk to our loved ones about how we want to pass on our wealth, and why. It’s not uncommon for couples to realise there is a divergence of views on wealth transfer for the first time in an estate planning lawyer’s office.

Without asking your family about their hopes and expectations, and without considering the interests of your beneficiaries, you have a greater risk that you won’t achieve your estate planning goals and that there will be a challenge to your estate.

Focus only on what happens after death. Thinking about transferring your wealth before your death can open up planning opportunities, such as providing help to a child when it is most needed, making a philanthropic gift when you see the impact, or undertaking lifetime restructures of your asset base.

How you transfer control of your financial decisions during your lifetime can impact the gifts you intended after your death. Whom you appoint and the powers you give them requires careful consideration.

Intermingling family finances

Couples in subsequent relationships may have accumulated wealth separately and plan for their assets to go back to their own families and children, and it is important to keep this in mind with how you manage your joint finances.

It’s worth getting advice about how your decisions now affect your plans later on. It is important to take the time to plan before you sell your home or help your partner renovate their house, or before you buy a home as joint tenants.

Tying your beneficiaries together financially

Life estates and capital reserved trusts are examples of strategies which tie your beneficiaries together after your death and may produce family conflict.

Consider how and when your children may inherit, and under what circumstances, particularly if your partner is likely to outlive you by some time.

Assuming your family will never be blended

In many first marriages, you and your partner probably agree that you want your wealth to eventually pass to your joint children on the death of the survivor, and you are probably comfortable leaving it all to each other in the first instance.

However, estate planning is ultimately about planning for protecting your loved ones if anything happens to you.

Read Also: How to Avoid Financial Nightmare during Divorce

In first marriages, some couples are choosing to acknowledge and plan for the prospect of later remarriage if one of them passes away.

They want to protect the wealth they have built together to benefit their children.

Ultimately, how you plan for the transfer of your family wealth can help to preserve or contribute to damaging relationships in your family.

You should consider whether your financial and estate planning recognises your values, your family dynamics, and the goals and interests of the parties involved.