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Blended families face unique challenges when it comes to estate planning. It’s important to have a strategy that reflects your family’s reality, not just what the law assumes.
Estate planning for blended families requires a nuanced approach to ensure fairness and clarity. Without proper planning, an ex could gain control of assets, or your wishes could be misunderstood, leading to legal battles or hurt feelings. It’s crucial to consider the specific needs of children from all marriages, as well as the current spouse.
Wisconsin’s laws that govern inheritance when there is no will (intestate succession laws) use general lineage as their guiding principle, which doesn’t account for more complicated family structures.
Many blended families need to account for supporting a surviving spouse as well as children that are not biologically related to that spouse. Or you may want to provide for your stepchildren in a way that the courts do not account for in their default inheritance laws. Or what if you are not divorced and remarried, but your children are, and therefore there are step-grandchildren to think about? Without a clear estate plan, your assets could be divided in a way that creates conflict, leaves some children out, or even unintentionally benefits an ex-spouse.
With a well-structured estate plan, you can provide for your current partner while also guaranteeing that your children receive their intended share in a way that avoids unnecessary taxes, court costs, or family conflict.
In Wisconsin, if the deceased did not have a will or trust in place, what a spouse and children receive depends on the specifics of your situation.
If you have children from a different relationship and a current spouse, the spouse typically receives half and the children receive half. If those children are minors, a custodian must be named to manage their assets until they are old enough to receive the inheritance outright. The court could name your ex as the custodian, putting that money in your ex’s hands and direct control.
If all your children are with your current spouse, the spouse will receive everything. That does not guarantee anything for your children if your spouse remarries or changes their own estate plan. It isn’t about trusting your spouse–rather, it is about ensuring your assets are split according to your preferences.
There are several ways an ex-spouse may inadvertently inherit or gain control over your children’s inheritance. This can create conflict between your current spouse and your ex, or your children and your ex when they grow up and learn their inheritance was not used the way you intended.
When minor children inherit, an adult must handle the inheritance until they reach the age of majority. If no one is named as a trustee through estate planning documents, the courts may assign the role of custodian to your ex.
Whoever is the custodian or trustee of the inheritance is responsible for managing those assets. This includes using the money for the minor’s benefit, but the custodian has a lot of leeway in determining what is in the child’s best interest.
If that custodian is an ex-spouse, they can use the money liberally, resulting in your child receiving very little or nothing at all when they are finally of age.
An ex can inherit if they are still named the beneficiary on life insurance, retirement accounts, or other assets. These beneficiary designations bypass probate and supersede wills and trusts, so it’s important to keep beneficiaries updated on all applicable assets.
If the beneficiary is a minor child you had with your ex, the ex very well may be named as the custodian of those funds until your child gets older. If you want the child to inherit the asset but are concerned about an assigned custodian, you can designate a trust as the beneficiary and then the assets will be distributed according to the trust’s terms.
If an ex is on a title, they may inherit the property or the proceeds even if they didn’t get it in the divorce. It certainly would make things more complicated for your current spouse and children as they attempt to navigate life without you.
The only way to ensure your wishes are known and carried out as intended is to plan ahead.
A trust is a popular option for blended families because there is more opportunity for nuanced control over how the assets are distributed. With a will, all assets are distributed at once. In a trust, you can ensure a spouse has use of certain assets but ultimately your children inherit once they pass.
When you create a trust, you also name a trustee to be responsible for the management and distribution of assets. This removes the risk of a court appointing your ex to manage assets for your minor children.
Trusts can distribute assets after certain milestones are met or when someone reaches a certain age. That can be helpful to ensure the inheritance is not received when a child is still under the influence of a manipulative ex or otherwise irresponsible.
An attorney can help design a trust that meets all your goals and provides for your loved ones in the way you intend.
Many people with a trust also use a pour-over will, which bequeaths all assets in your estate to the trust. This keeps beneficiaries private and ensures no assets are left out of the trust inadvertently. With a will, you can also recommend a guardian for any minor children you leave behind.
When families aren’t prepared for what’s coming, even a well-designed estate plan can lead to confusion, hurt feelings, or legal battles. This is especially true when your plan includes unequal distributions, blended family dynamics, or complex wishes. Even if a legal challenge will ultimately be unsuccessful, it is still an unnecessary stress and cost to your loved ones. We always encourage people to discuss their estate plan with their loved ones so there are no bad surprises, and your legacy is remembered the way you intended.
