Blended Families

How Do Family Relationships Mess Up Estate Planning?

Estate planning for blended families
Estate planning can help keep the peace in a blended family.

According to a recent Key Private Bank poll of financial advisors, 80% said that working through family issues is the most difficult aspect of estate planning.

With more and more blended families, the issues of equitable distributions among family members becomes even more complex. The interaction between parents, children, step-parents, and step-children can be tense in the estate-planning process—especially when a plan is put into action after a parent or step-parent’s death or disability.

Although these family dramas get in the way in many cases, there’s something you can do about it.

Having open family conversations about estate plans and wishes is the key. This can be hard because parents are afraid that sharing their wishes will cause conflict.

However, discussing your goals and how you’d like to share your wealth with your heirs, is only part of the story. You also have to update your documents to reflect your wishes. Review how your assets are titled and understand who is inheriting your wealth. From an estate planning perspective, you want to avoid probate and maintain control over the disbursement of your assets.

Probate is the process that states use to settle the estates of a deceased persons, who have not made arrangements to avoid probate. These proceedings are made a matter of public record, so there is no family privacy. It can also be expensive and time-consuming, and in some states can take a while, until beneficiaries get their shares.

Remember that retirement accounts like IRAs, 401(k)s and pension plans have named beneficiaries, so those assets pass directly outside of the probate process. The same is true for life insurance and annuities. These specific beneficiary designations—whether through “payable on death” or “transfer on death” accounts—will supersede any provisions in a will or trust. That’s why account holders and insurance policy owners should look at their beneficiary designations to be certain that the assets will transfer, according to their wishes.

Are you concerned that your family relationships will cause issues after you’ve passed? Our experienced, Madison area estate planning attorneys invite you to request a consultation to discuss how to keep peace in your family.

Reference: CNBC (March 18, 2019) “This is the No. 1 issue keeping you from inheriting that windfall”

A Recent Survey Asks, What Are the Biggest Threats to Estate Planning?

Estate Planning
Family dynamics have always played a crucial part in estate planning.

A recent survey conducted by TD Wealth at the 53rd Annual Heckerling Institute on Estate Planning found that nearly half (46%) of respondents said that family conflict was the biggest threat to estate planning in 2019, followed by market volatility (24%) and tax reform (14%).

Insurance News Net’s recent article, “Family Conflict Reigns As Greatest Threat To Estate Planning, Survey Finds,” reported that the survey also looked at the various causes of family conflict, when engaging in estate planning. They said that the designation of beneficiaries (30%) was the most common cause of conflict. Other leading factors included not communicating the plan with family members (25%) and working with blended families (21%).

Family dynamics have always played a crucial part in estate planning. With an increase in blended families, many experts think that these conversations will become even more frequent and challenging. Estate planning comes with the responsibility of motivating families to communicate through difficult times. This requires regular conversations and total transparency. To minimize risk, families should include everyone at the table to participate in an open and honest conversation about their shared goals and objectives.

Market volatility was also a big concern of the respondents for 2019. Almost 25% said that identifying volatile markets was the biggest threat to estate planning this year, up from 12% in 2018.

Market fluctuations are worth watching and can cause worry for potential gift givers. It’s best to maintain a long-term view when investing, and know that short-term market movements are no match for a robust estate plan and a well-balanced portfolio.

The Tax Cuts and Jobs Act continues to have a large-scale effect on estate planning. After the increase in the federal gift and estate tax exemption, there are some new strategies to allow people to take advantage of the exemption. About one third of respondents (31%) propose that their clients consider creating trusts to protect assets. About 26% say their clients plan to minimize future capital gains tax consequences and 21% agree to gift now, while the exemption is high.

Experts are stressing the importance of creating trusts for the benefit of family, so assets can be protected from future claims.

A total of 40% of estate planners think their clients will continue to give the same amount to charities as they did in 2018, with 21% expecting them to donate more.

If any of these threats concern you, we invite you to start a discussion with one of our experienced Madison area estate planning attorneys.

Reference: Insurance News Net (March 13, 2019) “Family Conflict Reigns As Greatest Threat To Estate Planning, Survey Finds”


Do-It-Yourself Will Leads to Disaster

This is a cautionary tale of what can happen when people create a do-it-yourself will without the help of an estate planning attorney. As Ms. Cockrum told News 2 in the article “The power of a will and trouble without one,” she’s going from court procedure to court procedure, and feels overwhelmed. The entire issue could have been prevented with a properly prepared will.

Without a valid will, a judge must determine how to divide assets in an estate. In this case, the biggest issue concerns the family home. The mortgage for the home is in her late husband’s name, even though they bought the house and maintained it together.

Here’s the problem: his children from a previous marriage are legally entitled to half of his assets.

Without a will or with a poorly executed do-it-yourself will, battles among family members are common. One purpose of the will is to name an executor (also known as the personal representative) who takes charge of distributing assets, including selling a home, paying off any debts and making sure that final wishes are carried out, as the decedent wanted. Without an executor, the first battle is over who will be in charge. That can take months and delay any resolution to the estate.

If there are minor children and no will, the opportunity to determine who will take care of the children is left to the court. Someone who does not know the family will make a decision to appoint the person who becomes their guardian. It may be someone you would not have wanted to rear your kids.

The will also outlines who gets what possessions from the estate. Family heirlooms and artifacts, like china, jewelry, collections and all kinds of items hold emotional and financial value. Fighting over who gets what, happens often when there’s no will. That takes time to resolve.

Without an estate plan to help manage tax liabilities, there may be taxes that could have been minimized. The cost of attorney’s fees to settle an estate without a will is also going to be higher than working with an attorney in the first place to create a will and other important documents.

Another surprise which families run into when there’s no will is that: people think the surviving spouse inherits everything. However, this is not always true. Without a will, the state law determines what happens to the estate’s assets. Depending on the state, your spouse may get 50% and your kids may get 50%, or the surviving spouse might get everything. In other states, the surviving spouse receives a third.

The simplest way to avoid this trouble is to request an appointment with our experienced estate planning attorneys and have an estate plan created that will protect your surviving spouse and your family. Our attorneys will also help you prepare for incapacity, with a power of attorney and healthcare power of attorney. This is not a do-it-yourself task.


Reference: News 2 (Jan. 29, 2019) “The power of a will and trouble without one”

Here’s Why You Need a Will

Many celebrities die without wills. This past year saw a host of celebrity estate snafus. It’s as if they were sending a message from beyond that they didn’t care about how much turmoil and family fights would take place over their money and assets. Some of these battles go on for decades. However, as reported in Press Republican’s article “The Law and You: Important to make a will,” even if you think you don’t have enough property to make it necessary to have a will, you’re wrong. It’s not just wealthy or famous people who need wills.

Do you really want other people making those decisions on your behalf? Would you want the laws of your state making these decisions? Your family will do better if you have a will and an estate plan.

For example, in Wisconsin, if you don’t have a will, and since Wisconsin is a community property state, your surviving spouse will receive all of your property. However, if you have children from a previous relationship, then they will inherit an interest in some of your property.

If you have a spouse but no children, your spouse will inherit everything. If you have children and no spouse, then the children get everything, divided equally.

If you have no spouse, no children and your parents are living; then your parents will inherit everything you own.

If your parents are not alive, your siblings will get it all.

Adopted children are treated by the courts the same as biological children when there is no will. Stepchildren and foster children do not inherit unless they are explicitly named in the will.

If you have been in a long-term relationship with someone and never married, even if they qualify for health care benefits from your employer under the “domestic partner” provision, they are not considered a spouse when it comes to inheritance. At the same time, if you are not legally married and your partner dies, you have no legal right to inherit from your partner’s estate. No matter how long you have been together, how many children you have together if you are not legally married, you have no inheritance rights.

Wisconsin does not recognize “common law marriages;” as a legal union.

If you want someone who is not your legal spouse to receive your assets, you need to meet with our estate planning attorneys and, at the very minimum, have a will drawn up that meets the requirements of the laws of your state. Our estate planning attorneys can explain how state laws work and what provisions are and are not acceptable in your estate.

Our estate planning attorneys will also help you consider other issues. Do you want to leave anything to a charity that matters to you? Do you want anyone else besides your children to receive something after you pass? Is there anyone who needs a trust, because they are unable to manage their finances, or you are concerned about their marriage ending in divorce? Making these decisions in a properly prepared will, can protect your family and lessen the chances of your wishes being challenged.


Reference: Press Republican (Dec. 18, 2018) “The Law and You: Important to make a will”

How Do I Contest a Will?

The ways that children of a first marriage can contest a will fall into several scenarios. However, in order to do so, a person must have “standing.” Typically, a person has standing in two situations, explains nj.com in its recent article, “Can children from a first marriage contest a will?”

One way is when the individual is the decedent’s heir by law and would inherit under the laws of intestacy if the will were declared invalid. Another way a person could have standing is if there were a prior will in which the person is a named beneficiary, and the prior will would be reinstated, if the subsequent will were set aside.

For example, in New Jersey, probate laws take blended families into consideration. If a person dies without a will and has descendants, like children or grandchildren who are not descendants of the surviving spouse, then several things would happen. The surviving spouse would inherit 25% of the estate (not less than $50,000 nor more than $200,000), plus one-half of the remaining balance. The descendants from outside the marriage would then inherit the remainder of the estate.

Let’s say George and Gracie were married and had baby Benny. After George and Gracie divorce, George marries Phyllis. If George dies intestate—without a will—then Benny would inherit a portion of his estate. If George dies with a will, Benny has standing to challenge the validity of the will.

As a practical matter, Benny should only challenge the will, if he’d stand to inherit more under intestacy than under the will, and he has a valid challenge justifying that the will be set aside.

The four most common considerations to contest a will are lack of capacity, improper execution, fraud, and undue influence/duress.

It’s not uncommon for someone to successfully contest a will. However, it really depends on the facts and circumstances of each specific case. For example, Benny would have a much tougher time proving undue influence, if John and Phyllis were similar in age and married for 30 years prior to George’s death, than if Phyllis was 50 years younger than George, and he had some level of dementia.


Reference: nj.com (December 11, 2018) “Can children from a first marriage contest a will?”

Proper Estate Planning Can Prevent Family Fights

The (Washington, PA) Observer-Reporter’s recent article, “Improper estate planning can lead to familial conflict” explains that some of your possessions will pass through probate. If you own property in several states, the process could become more difficult for your loved ones. A way to simplify the process for them is by having an updated will.

Research shows that about 60% of U.S. adults don’t have a will.

However, not all of your possessions pass through a will. 401(k)s, life insurance proceeds, pensions, and annuities pass by beneficiary designation.

For instance, even if your will states that all of your possessions are to be split equally between your two children, this may not be what occurs. If your life insurance lists only Bob as the beneficiary, he’ll walk off with 100% of the death benefit. Your younger son Doug will receive only half of the assets that don’t have a beneficiary designation. Assets that pass by designation are not controlled by the will. That is why Bob gets all the money from the insurance. As you can see, it’s vital that you review your accounts’ beneficiary designations regularly, to make certain they’re up to date. Check on them every few years or when there’s a family divorce, birth, or death. Once you’re gone, changes cannot be made.

In addition, comprehensive estate planning should include two powers of attorney (POA). The first POA is to make health decisions. The second POA is to make financial decisions if you don’t have the capacity to do so. Your POA agent has your authority to make decisions, only when you do not have the capacity and she can only exercise it for your benefit. POAs end at the drafter’s death.

It’s common today for families to have blended elements. Many people were married before and may have had children. Here’s an example of a famous father who made his third wife executor of his estate, giving her control of his business. In this case, his equally famous son was the principal player in the father’s business. The son didn’t understand the implications of his father’s estate plan. When the father died, there was a long and expensive legal battle between the son and the third wife.

Who was it? It was Dale Earnhardt Jr.

Work with our experienced estate planning attorneys to draft a comprehensive estate plan that clearly indicates your goals and wishes. Having a straightforward estate plan will go a long way in preventing fighting amongst your family.


Reference: The (Washington, PA) Observer-Reporter (December 7, 2018) “Improper estate planning can lead to familial conflict”

Can I Disinherit a Family Member?

This is never a decision to be made lightly, but we do live in a world where families aren’t always as perfect as their holiday cards. Some blended families never really blend, opioid addictions create huge challenges for families and some individuals are a family in name only. In that case, says Next Avenue in the article “How to Disinherit a Family Member,” you may choose to disinherit someone.

The first step is to work with our experienced estate planning attorneys, who are well versed in how family dynamics can affect your estate plan. This is a complicated process, and if you don’t do it right, it’s entirely possible the person you want to disinherit can appeal your action in court after you’ve died—and win.

A living trust may work better than passing all your assets through a will when you want to disinherit someone. A will is easier to challenge. He or she may say you were being influenced by someone else when you had your will written, and, therefore, the disinheritance does not reflect your real wishes.  They could also claim that you signed the will without understanding what you were signing and that you were not mentally competent and could not make legal decisions at that time. This is a charge of fraud.

After you die, your will becomes a public document, and anyone can find out who you decided to disinherit. They may be angry or embarrassed and feel the need to set the record straight, challenging your will to prove their worth.

A living trust, when prepared correctly, remains a totally private document. In Wisconsin, the validity of a living trust can be challenged only under certain circumstances.

There can always be charges of fraud, as a result of your being mentally incompetent to sign the trust. However, most people who create living trusts do so several years before their death. Wills are often written or revised shortly before death. Therefore, the person who created the trust has likely opened accounts in the name of the trust, used the accounts, paid bills, etc. That activity makes it hard to prove incompetence.

What if you want to leave someone only a partial inheritance? Your best bet is to ensure that your estate includes a strong “No Contest” provision, technically termed “In Terrorem.” It’s a little harsh, but the general idea is that whoever challenges the will, gets nothing. Courts don’t always like it, but heirs may think twice about challenging your will.

Remember that many of your assets are in accounts with beneficiary designations: IRAs, SEPs, investment accounts, life insurance policies, etc. Review the names on your accounts to make sure the person you want to disinherit does not appear on those accounts. You can also use Payable on Death (POD) or Transfer on Death (TOD) on accounts to keep that “disinherited” person from knowing about assets moved to other heirs outside of your will.

Blended families face unique challenges. Friction between stepparents and stepchildren can explode when one parent dies and the second spouse is left without the other parent as a buffer. Tensions that were kept under the surface, may bubble up quickly. Make sure that all the children know what your plans are for your estate, to avoid breaking up the blended family.

Disinheriting someone, for whatever reason, can create hard feelings that remain for generations. If you feel you have no choice, speak with our estate planning attorneys to be sure it’s done correctly and lessen the chances of any challenges.


Reference: Next Avenue (Dec. 11, 2018) “How to Disinherit a Family Member”

Blended Families Have Special Estate Planning Challenges

Following the death of her father, Mary remained close to her step-mother. Mary’s step-mother eventually left the area to be closer to her biological grandchild. In a scenario experienced by many blended families, Mary discovered, following her step-mother’s death, that her step-mother had changed the terms of her father’s and step-mother’s joint trust and disinherited Mary, leaving everything to her biological grandchild.

There was nothing illegal about what Mary’s step-mother did. The step-mother and Mary’s father signed a joint trust, and as the survivor, she had the power to amend and modify the trust after her husband died. However, it is not likely that Mary’s father would have wanted this—unless he did, and did not tell Mary. There are far better ways to address this typical estate planning issue faced by many blended families, as detailed in a JD Supra article titled “Seven Estate Planning Considerations For Blended Families.”

Spouses can leave their assets separately and have their own revocable trust. When the first spouse dies, a trust can be established, so the surviving spouse has income and even principal. The surviving spouse should not be the only trustee, which would avoid the situation described.

Consider giving children a bequest after the first death. That way, if the surviving spouse needs to use all the funds, at least the biological children will receive something.

Make a joint trust irrevocable upon the first spouse’s death. If spouses sign a joint trust, then draft the trust, so that it becomes irrevocable on the first death.

Give thought to having separate bank and/or investment accounts and name children as beneficiaries, if you want them to inherit your assets. If assets are owned separately, there is a better chance of avoiding a lopsided inheritance or some children being disinherited.

Talk about your funeral plans. Do you want to be buried with your deceased first husband? Where do you want to be buried? Do you want the kids to decide? Avoid a lot of heartbreak by discussing this, as difficult as it may be.

Name a spouse and children as co-agents. If everyone works well and plays together, this could give everyone a voice in important decisions. You want to strengthen a family, not fracture it.

Communicate, often. This is not a one-time conversation. Blended families should not sweep this topic under the rug.

Check beneficiary designations. These are the forgotten distant cousins of estate planning. People create accounts, name beneficiaries and then often forget about them.

Blended families are always a work in progress and the better you can plan ahead for the death of one of the spouses, the more likely the family will remain a cohesive unit after one parent dies.

Our estate planning attorneys, experienced with blended families, understand the dynamics and be able to help you plan for a positive outcome that protects parents, children and grandchildren.


Reference: JD Supra (Nov. 14, 2018) “Seven Estate Planning Considerations For Blended Families”
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