Estate Planning for the Modern Family

Q. My family is not what many would consider “ordinary.” I am divorced and have been remarried for five years. I have a 40-year-old stepdaughter, a 25-year-old daughter, and a 10-year-old grandson, all of whom reside with us. My mother lives with us, as well, in a large home that I purchased with her, my brother, and his husband. Any suggestions when it comes to estate planning for my “modern” family? Thanks!

A. The “traditional” family—a married heterosexual couple with children—used to be the most common type of family in America. However, today, only 19% of families are traditional. The rise of blended, same-sex, and multigenerational families has made so-called “modern” families nearly as common as traditional ones.

Even though traditional and modern families share many of the same needs, modern families have their own specific set of challenges. Blended families, for example, struggle with the costs of divorce, raising children from multiple marriages, and potential inheritance conflicts.  Same-sex couples welcome the Supreme Court ruling on gay marriage, but still face distinct estate planning challenges. Couples who support adult children or aging parents worry about funding their own retirement and healthcare needs.

The following are some recommendations for “modern families”:

Blended Families 

Remarriages and blended families present their own challenges when it comes to estate planning. Once you have been through a divorce, you understand that “happily ever after” isn’t always the case. Fortunately, estate planning that takes into account your unique family situation can alleviate most of your concerns, allowing you to fully pursue your second (or third, or fourth . .  .) chance at love. Below are some tips: 

  • Have an open and honest discussion: The first step is to have an honest conversation with your new spouse about your existing finances, goals for the future, and how you expect your assets to be distributed — if you die before your spouse and if you die after your spouse. These conversations can be difficult and emotionally-charged, but they will reap innumerable rewards in the long run. Since your children are adults, you may also want to include them in these discussions so that everyone knows what to expect. It is prudent to meet with an experienced estate planning attorney prior to remarriage to assess your options. But, if you have said “I do” again and haven’t done so, it is not too late! The most important thing is to do something. Don’t let the state determine how your assets will be distributed. Read more about estate planning for a second (or higher number) marriage here. 
  • Make sure documents are up-to-date:  Blended families often don’t update their estate planning documents to address their changing circumstances, and this is a big mistake. How else can you ensure that each spouse’s share of the estate ultimately ends up with his or her desired beneficiaries? It is important if each spouse has children from other relationships, that those children’s inheritance is protected even if their parent is the first spouse to die. 

Multi-Generational Families 

People are living longer than ever before. As a result, more aging parents are moving back in with their adult children for support. At the same time, due to the economic downturn and inability to make ends meet in an entry-level job, more young adults are also moving home after college. 

  • Determine goals, priorities and constraints: As described above for blended families, it is a smart idea to have an open and honest discussion with adult members of your family. Initially, a list of goals should be developed. Frequently-cited goals for multi-generational families (and everyone else) include:  1. Minimizing taxes;  2. Providing adequate retirement security (avoiding unnecessary dependency on others); 3. Treating heirs fairly;  4. Providing for special needs of some heirs;  5. Continuation of a family business;  6. Continuing family ownership of a home, farm, or other possession; and 7. Maintaining maximum flexibility to meet changing needs and situations. Once you’ve decided on your goals, determine family members, charitable organizations or others that you wish to include in your estate planning documents. Then, choose an executor you can trust. Read our blog post on this subject for more details. 
  • Consider estate and gift taxes: Multi-generational estate planning is often designed for those who wish to minimize the payment of federal and state estate taxes, to ensure the majority of their wealth is available to supplement the expenses of their children, grandchildren and even great grandchildren. For more information about gifting and Medicaid eligibility, read “Medicaid: The Perils of Gifting FAQ” on our website. This blog post also provides important details on this subject. 
  • You can still have your own plan: Planning with your extended family doesn’t necessarily mean you won’t be able to create a private plan for yourself and your spouse. It is quite possible to create individual estate plans for each nuclear family while still respecting the decisions that the extended family made together. 

Same Sex Couples 

Now that the Supreme Court has legalized same-sex marriage, LGBT married couples must plan for their future and their loved ones. Challenges for same-sex couples relate to the inheritance they could receive, as well as what they intend to pass on. 

  • Added complexity: In terms of passing on their own wealth, four out of ten feel being part of a same-sex couple adds complexity to estate planning. LGBT couples who marry now need to consider the marital deduction, combining individual gifting allowances, estate tax portability, and more. Read about these things and useful documents for LGBT couples in our recent blog post. 
  • Children: With more and more same-sex couples having children of their own and adopting, it is becoming especially important to plan, particularly in situations where children are being raised in families headed by LGBT parents in which one parent has no legal ties to the child. Read more here. 

Estate Planning is Important for All Families 

We here at The Law Firm of Evan H. Farr, P.C. have strategies in place to help all types of families plan for themselves and their loved ones. With advance planning, each person, regardless of their family situation, can retain the income and assets it has taken a lifetime to accumulate and the peace of mind that their child(ren)’s needs will be adequately and properly addressed. If you or members of you family have not done Incapacity Planning or Estate Planning, or if a loved one is beginning to need more care than you can handle, please contact us as soon as possible to make an appointment for a consultation: 

Fairfax Estate Planning: 703-691-1888
Fredericksburg Estate Planning: 540-479-1435
Rockville Estate Planning: 301-519-8041
DC Estate Planning: 202-587-2797 

This article was featured in the Aging Industry Insider.

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.