Estate Planning for Blended Families

Serving Families throughout Houston, Texas and the Surrounding Areas

Blended families – families that include children from prior relationships – now outnumber traditional nuclear families in the United States. If you are part of a blended family, you know firsthand that these families bring unique joys and unique challenges. Estate planning is one area where those challenges are particularly acute. Without careful planning, a blended family estate plan can inadvertently disinherit the very people you are trying to protect.

The statistics tell a sobering story. Approximately 60% of second marriages end in divorce. When a second marriage fails – or when a spouse in a second marriage passes away – the financial and legal consequences for the children from the first marriage can be severe. The default rules under Texas law were designed with traditional nuclear families in mind, and they do not always produce fair or intended results for blended families.

The Challenge of Disinheriting an Ex-Spouse

One of the first concerns for anyone entering a second marriage is ensuring that a former spouse does not benefit from the estate. In most cases, a divorce decree terminates a former spouse’s rights under a will or trust. However, divorce does not automatically update beneficiary designations on life insurance policies, retirement accounts, or other financial instruments. If you forget to change a beneficiary designation after a divorce, your ex-spouse may receive assets that you intended to leave to your children or your new spouse.

Protecting Your Children

In a blended family, one of the greatest estate planning challenges is ensuring that your children from a prior relationship are provided for after your death. Without a properly drafted estate plan, your children may receive nothing. Here is how that can happen: If you leave everything to your new spouse outright, your new spouse is free to do whatever they wish with those assets – including leaving everything to their own children, a future spouse, or anyone else. Your children from a prior relationship have no legal claim to the assets once they belong to your new spouse.

The Risk of a New Spouse Inheriting Everything

If you die without a will, Texas intestacy laws will determine how your property is distributed. In a blended family, the results can be unexpected and unfair. Under Texas community property law, your surviving spouse is entitled to their one-half of the community estate. However, your one-half of the community property passes to your children – not to your surviving spouse – if you have children from a prior relationship. While this may seem like it protects your children, the reality is more complicated. Disputes can arise over the characterization of property as community or separate, and the surviving spouse often controls the property as a practical matter, even when the children have a legal interest.

Even more concerning is the scenario in which you leave everything to your new spouse in a will or trust with the understanding that your spouse will “take care of” your children. This informal arrangement provides no legal protection whatsoever. Once the assets belong to your new spouse, your children are entirely dependent on your spouse’s goodwill.

Protecting Inheritance from Squandering, Divorce, and Lawsuits

Even when you have taken steps to leave assets directly to your children, those assets may still be at risk. Without proper planning, the inheritance you leave to a child could be squandered through poor financial decisions, lost in a divorce, or seized by creditors in a lawsuit. A properly drafted trust can protect your children’s inheritance from all of these threats.

A trust allows you to set conditions on how and when your children receive their inheritance. You can require that distributions be made only for specific purposes – such as education, health care, or the purchase of a home. You can appoint a trustee to manage the assets and make distribution decisions. And you can include spendthrift provisions that prevent your children’s creditors – including a divorcing spouse – from reaching the trust assets.

At The Stegall Law Firm, we understand the unique dynamics of blended families, and we have extensive experience helping blended families throughout Houston and the surrounding areas create estate plans that protect every member of the family. Whether your concern is ensuring that your children are provided for, protecting your new spouse, or preventing unintended consequences, we can help you design a plan that achieves your goals and reflects your values.