Blended Families: Update Your Estate Plan

Blended families can face numerous challenges, but one issue you can certainly avoid is your estate distribution upon your death.

Unfortunately, stepchildren are disinherited more than you may think. And, believe it or not, it’s not always intentional. Poorly-drafted estate plans are often the culprit.

In this article, we’ll cover some of the common issues blended families face when a proper will isn’t in place. And we’ll tell you what happens in Colorado if you pass away without an updated will.

1. The Dangers of Not Having an Updated Will
2. The Pains of Probate
3. Consider a Guardianship Plan for Minor Children
4. What Are My Next Steps?
5. Create a Blended Family Estate Plan

The Dangers of Not Having an Updated Will

Colorado law states that the inheritance of a married person (including common-law marriages) goes to the surviving spouse unless otherwise specified in a last will and testament. Colo. Revised Statutes § 15-20-104

In remarriages, specifically those involving blended families, this scenario is wrought with potential problems.

Without a will to specify who gets what, the surviving spouse could favor their own children over non-biological children. They could choose to gift away assets outside of your family. They could even run into problems with creditors and need to sell off assets to pay your remaining debt. And they could remarry and accidentally disinherit the children from the previous marriage — meaning your assets would go to your spouse’s new partner and not to your children.

The above scenarios aren’t meant to instill distrust of your spouse. Instead, they are meant to underscore the uncertainties that come without having an updated estate plan in place. If you have certain wishes regarding your estate, don’t leave your spouse guessing. Put it down in writing. 

When thinking about how best to tackle your new estate plan, ask yourself questions like:

• What happens to my separate and commingled assets if I die and my spouse remarries?
• How do I want to divide my assets between biological and non-biological children?
• Do I want my children to wait until both my spouse and I die to inherit?
• Who will inherit my house — my spouse or children?

The Pains of Probate

If you die without an updated estate plan, your assets will go through probate. A court will then disburse your assets according to Colorado law. This process can be emotionally taxing for your surviving family members.

Fortunately, there’s a relatively simple way to solve this problem. One way is to update your estate plan to include a trust. A revocable trust allows you to avoid probate, keep your finances off the public record, and protect your wishes from contentious family members.

A trust is also a good option for:

•         minimizing inheritance taxes (for larger estates worth $5 million or more).
•         caring for disabled or special-needs dependents.
•         safekeeping inheritances until dependents come of age, or conversely;
•         allowing family members immediate access to inheritances by bypassing the probate process.

Consider a Guardianship Plan for Minor Children

In the event of your death, your minor children will go to the other biological parent. If you’re remarried, that means your ex-spouse. If, for whatever reason, you believe that your ex-spouse should not get sole custody of the children, you can state so in your will. However, courts usually favor keeping a child with the biological parent.

Therefore, you will need evidence to show why your ex-spouse is unfit in order to persuade the judge to accept other arrangements. Police reports and other court records are a good place to start.

If you have children with your current spouse, you may want to also consider appointing a guardian should you and your spouse pass away unexpectedly.

Things to consider when selecting a guardian are:

• How far away do they live from your children’s school and other family members?
• Do they have a spouse, and would that spouse be supportive?
• Is this person financially able and mature enough to care for your children?

To read more about guardianships, please read our blog post here. 

What Are My Next Steps?

To get the ball rolling on developing a new estate plan, you can:

• take inventory of all marital and separate assets.
• have a frank discussion with your spouse about goals and wishes.
• consider the feelings of immediate family members.
• meet with your estate planning attorney to update all documents and beneficiaries.

Create a Blended Family Estate Plan

Done properly, a blended family estate plan will ensure financial goals are realized and dependent children are cared for. R&H’s Estate Planning Team will create an estate plan that reflects your goals and accounts for your new blended family structure. Call 303-688-0944 today to begin your case assessment.