Estate Planning With Blended Families, Part 2
In our most recent blog post we began a series on estate planning for blended families. With the rise in divorce rates in our nation, blended families are becoming increasingly common. And these families have estate planning needs that are more complex than nuclear families. At Phelps LaClair, serving Gilbert, Chandler, and Mesa, we are helping blended families find estate planning solutions that offer asset protection and assurance that beneficiaries will receive their inheritance. Two of the challenges blended families face involve long-term care needs and clear delineation of the division of responsibility and authority.
One of the scenarios that can decimate an estate is the need for long-term care. This becomes even more complex within a blended family. As an example, suppose Wayne and Susan marry in their 60s. They both have children from prior marriages. Susan brings significantly greater assets into the marriage than Wayne, due to a very favorable divorce settlement. Several years into their marriage, Wayne develops a debilitating disease that requires long-term nursing home care. Without a long-term care provision in their estate plan, Susan is forced to pay for the nursing home costs out of her own funds. Her children’s inheritance is drained to almost nothing.
Long-term care provision is important for every family; with blended families, because the husband and wife are usually older, it needs to be included in the estate plan as soon as possible.
Division of authority and responsibility
We have mentioned in previous blog posts the ongoing case of the Tom Petty estate. To recap, Tom Petty left a very sizable estate when he died suddenly. In his trust, Dana, his second wife, was named as sole trustee. The trust ordered Dana to establish an entity to control his music catalog, with equal “participation” from Tom’s two daughters from his first marriage. When Dana established the entity, the daughters assumed that together, they had a majority of decision-making authority and began to make unwise decisions on the estate’s behalf. Claims were filed back and forth between Dana and the daughters. The case is still in probate court. No matter what the judge decides, some party is going to “lose.”
The main problem with the Petty Trust was the use of language that is unclear and unspecific as to the duties and authority of each of the parties. Of course, this wrangling over control could happen to any family, but it is far more likely to occur in blended families where there are not strong biological ties. We must assume Tom Petty’s desire was to provide for and protect both his wife and his children. Unfortunately, a poorly worded trust created a huge legal, financial, and personal problem for his blended family.
If you’re living in the Phoenix Valley and looking for help concerning estate planning with blended families, Phelps LaClair is here for you. Estate planning is our sole occupation and has been for almost 40 years. We know every family is unique, and we design estate plans for every situation—whether their estates are large or modest. Come in and see us: your first consultation is free! We’re great listeners and we care to do the very best for our clients.
Images used under creative commons license (Commerical Use) 06/19/19 Image by OpenClipart-Vectors from Pixabay