The WAY to WOW Shows
Estate Planning for Blended Families
October 9, 2023
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[0:27] hello and welcome to uh trust and Estates weekly had to remember what show it was here I'll take my well no actually I got to be able to read um I'm your host Kevin bemel and we are here every Monday morning to start off the week at uh 10:00 amm Pacific time that's 1 pm eastern time of course and an hour in for mountain and central time and we look to help you understand estate planning both for your own purposes and as a potential um addition to your business where you help people with their estate plans so if you're in uh

[1:04] Investments Insurance real estate uh Property Management um any any of those um areas law of course law and accounting any of those areas that are necessary for someone creating an estate plan so this is the place to come to learn about various issues and and if you'd like um participate in the meetings ask questions and and if you're a a professional professional in that area um already then let me know we'll we'll have you on the show love to get your perspective on these various issues so

[1:39] today you know for the last um I don't know two three weeks I've been reading um a number of books on um dating and family life here in the United States um in particular focused on the the 20th century and how things changed from um the Victorian period of the late 1900s um through uh generally speaking uh around the 1970s and 80s and one of the big changes of course for anyone who's lived through that period is the dramatic increase in Blended families

[2:15] where um you know either a couple uh divorces or one spouse dies and the other spouse gets remarried and um either there are children from the first Union and then additional children from the second one or in some cases there are children uh both both people bring children to the second marriage and and so this is a more complex uh situation um then you would you know typically see where you have a couple

[2:52] who's been married to each other their whole life and so they have um one one set of children now by the way that isn't to say that that necessarily makes estate planning easier um it it can certainly be um complex um if for various reasons your um you know your children um don't get along those kind of things or if there's been disputes in the family but Blended families add another layer of potential complexity to it and so I'm going to talk about a few of the most um relevant issues and um as

[3:27] usual I have a little PowerPoint because I makes it easier to uh remember things so here we go so trust in Estates weekly is our show and um everything we do here is focused on um the three pillars of attainment um and uh we're dealing here in the finances realm um but we're also going to be dealing in the relationships realm primarily with uh familial relationships um obviously okay so let's go to the next side so I'm

[4:04] going to cover four four um issues that relate to estate planning for Blended families um and then after this we're going to talk about some strategies for dealing with those issues so um the four issues are multiple children from different relationships um differing financial needs relationship Dynamics and potential for conflict and and the fourth one of course um kind of grows out of the other three so let's let's

[4:40] take each of these and and talk about them in in a little bit of depth so when there are children from um multiple relationships or multiple marriages right um that can cause um conflict and competition among um the various potential heirs um to the estate okay and you know this can be exacerbated by several things one is um you know

[5:16] children from um one one relationship um may be older than the other children and so they're in a different stage of Life which we'll talk about um in a minute okay they can be more self-sufficient um and and by the way the younger children may be more self-sufficient because they were raised differently than the first group of children and so um you know they they may and and and and the fact that they're self-sufficient may may cause their um

[5:54] um parents to think well you know they're on their own they don't need help um we've got to help help the children who are less self-sufficient at the same time the ones who have worked hard to become self-sufficient may feel like wait a minute I you know we worked hard to not be a burden on you how come then in the end you know we lose out on you know gaining anything uh from from the estate right so um a lot of it comes down to making well we we'll talk about Solutions let's let's first of all talk

[6:29] about potential problems so as you look at your uh estate plan for a blended family I think the first step is to look at who are all the potential heirs and what are what are the sort of qualities of those various relationships are some of the children minors are other children adults um are some of them well along in life maybe they're married okay so that that even even causes another level of complexity because now there's there's spouses of

[7:04] heirs involved and they don't necessarily have the same kind of familial ties that the children do and so they may um they may advocate for their you know spouse to um take a particular position with respect to what's being done in the estate planning okay some of the children may have children so there may be grandchildren there may be multi mle grandchildren and how are those how are they going to be um accommodated or not within the estate plan okay so all of

[7:40] these um become relevant now um I'm GNA put this in here um because um it can be relevant so when there are multiple um relationships or yeah multiple relationships so let's say you know a couple was married they divorced and now remarried okay so now there's um uh you know two spouses and and how has uh well an ex spouse and a current

[8:15] spouse how has that been dealt with okay um has has that has the divorce proceeding um also dealt with whatever was happening um in the estate plan okay so um keep that in mind as well okay so multiple children from different relationships multiple spouses exp spouses whatever all of that can be a potential source for conflict okay differing financial needs so um the the potential heirs may

[8:51] have um as I said before maybe in different stages of their lives and so that may lead to different financial needs for them so let's say that one group of children is uh still in um Elementary or secondary school high school whatever Junior High um and and the other group is already in college well if the first group is going to public schools so there isn't um nearly the kind of financial cost associated with that that there is for children

[9:28] going to college even even if they're going to a a state college or university these days um the cost can be quite significant okay and so um they may be in need of more financial aid um on the other hand if they have Financial Resources um at their disposal so that may mean that they qualify for Less financial aid either through um the federal government or state governments or through private sources so those kinds of issues create different

[10:04] financial needs another situation what there could be a situation another another case could be a situation where um one or more uh family members is uh disabled in some way maybe there's um maybe they're they're uh neurodiverse autism or um Down syndrome and so they need um Support Services more support services than you know someone who is who's who's not neurodiverse okay um they may be physically handicapped and

[10:41] and as a result um for example they may need a you know special equipment to drive a car or something like that that's more expensive than a regular car they may not be able to live on their own at all they may need inhome support in order to to live so all of these create differing financial needs for different different potential heirs okay now another situation is where there are grandchildren so the children who are heirs now have children and of course

[11:16] there's costs associated with raising children and so the the children with children have a different Financial need than people who are single okay so all of these are you know absolutely ripe areas for disputes to come up between heirs and and and I'll say just as a slight digression here the idea that heirs don't fight until the person who created the estate plan is deceased is is not true at all heirs will start fighting when when they're I mean not

[11:53] they don't they won't necessarily do so but they some will start fighting long before the person is is even sick enough to be thought that they may die soon okay so when there's money on the table that can be a source of conflict and so these all need to be worked out and dealt with um really sooner rather than later um and in and and a um um a uh a path is the wrong word but a a sort of Baseline needs to be set of how

[12:28] you're going to deal with these either as the person planning the estate or as someone advising them okay relationships Dynamics are next so do the um children from different families get along are they estranged do the children from the same you know set of parents get along or are they estranged all of those relationship Dynamics um come into play and you will you may off you may find that other Dynamics you didn't know about come into

[13:04] play as well so there could be sort of um um uh un underground if you will um rivalries or um um the word I'm looking for is not coming to me but but resentments is the word I'm looking for there could be sort of unexpressed resentments between Children of the same parents or children of different parents you know the children of different parents they may feel that the the the children from the more recent marriage are being treated much better than they were treated um maybe because there was

[13:40] a lot of conflict between their parents and and as a result the children feel that um they are not being treated equally or or as decently as the others um it could be that um that the um when when the P when when the person got remarried um um the children from the new spouse resent the P you know the person marrying their parent and so those kind of resentments can go on and and they may you know on the face of it people may be playing very nice and they're polite and all of that but then when it comes time to deal with estate

[14:16] planning issues some of these things come bubbling to the surface and now they have to be dealt with so it's wise to explore relationship Dynamics both with your spouse and with your children and you know exploring them as a group may be a fraught process it may be better to talk to them one onone okay we'll talk a little bit more again about um ways of approaching this in in the next slide okay but but the you know if you've got a family a blended family where everybody gets along everybody is

[14:51] mutually supportive so you know it may not be that that much of an additional um strain in creating your estate plan um but to the extent that there are difficulties difficult relationships so that that just makes PL doing doing the estate planning more challenging okay finally potential for conflict so for all of the forging reasons there are many more potent there's much more potential for conflict okay and so a lot

[15:28] more work needs to be done to try to avoid conflict okay they say you know blood is thicker than water and um that is oftentimes the case and so when you have you know Step Brothers and Sisters stepchild um that that old adage can come to the foreground okay now by the way sometimes what happens is in order to comp compensate for this idea that blood is thicker than water the stepchildren get

[16:03] treated better or with more care than the natural children the blood children however you want to describe that and and that too can cause some resentment so you know it's something to look at very carefully and really give some thought to jot some some notes down um as you're doing it so you don't forget various issues that that come to mind or questions that need to be asked okay that way you can be as thorough and as foresightful if that's a word as

[16:39] possible as you approach your estate planning and as advisors encourage your clients to to do that to really think about these things talk them over um and then and then take the next steps from there which is what we're going to do looking at the next slide so how do you avoid potential conflicts BEC based on the you know foro four points so first of all communicate with your spouse and children okay before making decisions or at least before announcing

[17:16] any decisions okay talk to your spouse talk to all of the children involved if there's grandchildren you may want to talk to them as well depending on how old they are now if they're very young then you know probably not but if they're you know teenagers or in college it could be a very good idea to talk to them and get their thoughts you may get some insight into their parents your children that you weren't really aware of okay I'm sure you've heard the old adage out of the mouths of babes right so you know not that that not that

[17:52] people in college are are you know babes but you know they're they're younger and they may um be more candid with you than your children would than your children are um just in the interest of you know talking to you and and and look let's be honest sometimes grandchildren have a closer more open relationship with grandparents than the children do with their parents and so there can be a greater free flow of communication and you can you can come

[18:27] to understand things um in a in a deeper way than you would have if you excluded the grandchildren or the step-grandchildren from the conversation so cast your net broadly as broadly as as as you know you and your advisors um deem prudent um obviously you don't want to put small children um under the burden of um you know having difficult discussions that they may not understand or they may not feel comfortable about that they may feel their betraying a parent okay so you know if they're too young to understand those kind of things

[19:03] um overtly yet they can kind of understand them you know inside so then you probably want to uh tread with with with more caution okay so an next thing um in terms of dealing with the potential conflicts Etc is consider using a trust so if you set up a trust okay everything can be mapped out um there's you know there's less less left to discretion okay and um in that way

[19:38] everybody can know um before you're passing what the situation will be okay and um whether you're using um a a living trust an inter Vios trust or you're using even multiple trusts um there's there's there's lots of different ways to do it this is something you're going to want to talk about with your um accountant and and and legal advisor your attorney and see how could using this tool facilitate a situation where there's less opportunity

[20:14] for conflict to erupt and and and cause um uh errors or potential errors to challenge the estate to you know run up legal fees um and and and all of those kind of things so the clearer you can be in the documents you use to create your estate plan and then going back to the first one communicating that back to your spouse and children uh now if you have a spouse presumably you're um

[20:50] you're you're building your estate plan together although not necessarily okay um but you want to communicate back to them once the plan is done done just because it's done doesn't mean that it is you know unchangeable for all time after you get it done and you present it you talk about it you get some input you may decide to make some alterations perfectly legitimate to do that it's a good process to go through um it can be very difficult to get things ju you know the way you want them especially the way you want them in terms of reducing potential for conflict

[21:26] on the first go around okay okay so you know if if it necessitates making some changes so make some changes present it again and look that doesn't mean you know you may not be able to satisfy everyone or for that matter anyone there may be a point where you you have to say look this is the best it's going to be um I do I have a friend who's who's a lawyer who says when I you know negotiate a transaction if both sides are unhappy it's probably going to stick right because if one side is really happy and the other isn't then

[22:01] there's an imbalance there but if both are you know kind of unhappy well so all right you know they everybody got some things they wanted they they didn't get other things they wanted okay that's probably a pretty reasonable um you know negotiation so um you know and then then again documenting that in a trust may be a better way to handle it than putting it in a will okay next you you you might consider choosing a neutral fiduciary okay so especially if there's a lot of conflict between the potential

[22:37] heirs choosing one of them to administrate your estate whether as an executive executrix or as a um administrator or as a trustee in the trust that all that alone may trigger conflict okay and um es especially if you've got two different groups group of children you know children and stepchildren and they don't get along so if a representative comes from one group the other group is likely to feel slighted or cheated okay if you have more than one representative you may set

[23:13] up a situation where because they come from different groups that don't get along that that making decisions becomes virtually impossible because they're all always arguing okay so it may work better to set up to choose a neutral fiduciary okay so here in California I've mentioned this a few times like I'm a professional fiduciary so there is this role called professional fiduciary and our job is to administrate Estates and trusts Etc on with with that fiduciary obligation and in accordance with the wishes of the grantor in the

[23:49] case of a trust so um we're not involved in the emotions and such that may be going on between The Heirs or the you members of the the the children and the stepchildren ETC and so you know we can be um more um objective in handling decisions okay also it doesn't then put the pressure on um a member of your of your family to be making decisions that

[24:24] you know maybe they're not comfortable making maybe they want to be there and and and they they feel they're acting in in a in a fair way but then you know their their siblings their blood siblings feel like well why are you bending over backwards to you know to to you know benefit the this this you know the step kids um and and now we're losing out now the person's kind of caught between a rock and a hard place so rather than putting you know one of your heirs or one of your children in that position it might work out better to choose a new neutral fiduciary one

[24:59] who is not connected in any way with with the family and that way again the person can be um more objective I would add too that um if you have a a situation where you feel conflict um could potentially arise so it it may be better to choose someone with experience in dealing as um either an executive executrix or as an admin Ator as a trustee and has dealt with some of these kinds of problems before and so they

[25:34] they can approach them with some some problem solving some relationship mediating skills rather than choosing someone who has no experience in it and and therefore is you know really kind of you know thrown into the the fire so to speak um and and really um you know kind of flails around um in in trying to figure out how to make all of this work okay finally update your estate regularly that's that's what this last word here as I bled over onto the white I didn't notice that when I put the slide together so as I was saying before

[26:11] when you put your estate plan together you communicate it back to your your spouse your children your stepchildren all whatever and you'll get some input you may make some changes in order to set up the initial estate plan but then periodically you're going to want to review it there may be changes in in the family composition there may be changes in the family Dynamics there may be changes in um any number of these issues so financial needs may change relationship Dynamics may change okay um

[26:47] you know God forbid you know children could you know predes you so for all of those reasons and and many more it makes sense to periodically review your estate plan with your advisors your accountant your lawyer um you know again if there's real estate so you may have a real estate advisor your investment advisor Etc um you know maybe you want to take a look at it every year maybe every two years maybe anytime there is a family changing event a birth or a death um you

[27:22] know there can be various triggers again talk to your advisers about that and determine what makes the most sense for your situation and as advisors okay we should be periodically reaching out to our clients and just just touching base and saying hey have there been any changes that may require you know reviewing your estate plan okay and if the answer is no then okay great so hey good talking to you take care you know I'll touch base with you again in you know in six months or I I'll touch base with you again you know this time next

[27:57] year or or you know the person you know the person may say gosh you know nothing's happening right now but you know um three months from now um one of my children is getting married and blah blah blah blah blah I'm this right this I don't have the time to do it right now we're in the midst of planning a wedding say okay well let me follow up with you saying about four months after the wedding is G done and you know we can we can just discuss it and see if there's anything that needs to be done and and that way you're helping your clients help thems eles by keeping their estate plan up to date okay so that is uh an

[28:36] overview of estate planning for Blended families if you need any help here's uh different ways to get it you can send me an email at the way to wowshow atl.com here's a few social media links all of this will be in the show notes after the um episode posts to our YouTube channel okay which is you you tothe way to wow and um you can um you can go there and view all of today's episodes as well as all of our past episodes for all of our shows so let's

[29:11] see I think the next thing is just the legal stuff right yep legal stuff and let's go ahead and stop sharing okay so that's the show for today um you know short and sweet just helping you recognize um this kind of you know little bit different area of of estate planning again both for yourself and as as someone who works with people creating their estate plans so tomorrow at 11:00 a pacific time is my show business lessons from the military and we'll be continuing with our discussion

[29:47] of dealing with uh cultural issues um and how they how we can deal with them to um create better teams and make our businesses more successful and then on Wednesday at 12:30 p.m. Pacific time is people making money and we're going to be talking about what I've been putting in quotes is the quote unquote magic of compound interest so um if you've never really looked at this and how it works I think you will find it quite interesting and it'll really help you expand your

[30:24] knowledge of how to invest wise ly um it's it's going to it's going to be a little bit numbers oriented okay so we we're going to do some math but don't be don't be uh you know concerned about that as I've said in the past really investing isn't math it's money and and I think most of us find money easier to deal with uh than math there's not going to be any geometry or or algebra that kind of thing um but um you know we'll we'll we'll make sure I'll make sure that uh it's it's done as as comprehensive as as possible and then next week uh

[31:01] seven days from today will be the next edition of uh trust and Estates weekly so I invite you to join me for all of our shows and I mentioned um the YouTube channel if you're not already a subscriber uh you know please uh do consider subscribing that way um you'll always know when a new episode is is airing and you won't you won't miss anything so thank you very much for joining me I appreciate it and look forward to seeing you tomorrow signing off Marie darling you are my bell take

[31:37] care everyone