Navigating the estate planning complexities in blended families can be challenging. Couples and individuals face unique challenges, such as treating biological and stepchildren fairly, how to divide co-owned property, and protecting family businesses and wealth. Working with a Wisconsin estate planning lawyer to develop estate planning strategies for blended families can help avoid family conflict.
Wisconsin Laws That Impact Blended Family Estate Plans
Several Wisconsin laws impact estate planning for blended families, including:
Wisconsin Intestate Laws
If you die without a will, the Wisconsin intestate laws determine how your estate is distributed. Intestate laws do not provide for stepchildren. The estate is distributed to your closest relatives, typically a surviving spouse and children.
Wisconsin Marital Property Law
Wisconsin is a community property state. All property acquired during the marriage is to be divided equally between the spouses, including property, income, and debts. Certain exceptions apply to separate property, including inheritances, gifts, and premarital assets.
Therefore, individuals in a blended family need to address community property and separate assets to ensure a fair distribution. Also, commingled assets can complicate the matter further.
Prenuptial and Postnuptial Agreements
Marital agreements can be a valuable tool for estate planning in blended families. A couple can use prenuptial and postnuptial agreements to waive rights to each other’s estates under intestacy laws. The agreement can include provisions for inheritances and clarify the classification of assets (i.e., community property vs. separate property).
However, prenuptial and postnuptial agreements are not substitutes for estate planning. Individuals need wills and other estate planning documents to ensure their estate is distributed according to their wishes.
Using Trusts to Preserve Legacies and Protect Children in Blended Families
Trusts are a valuable tool in estate planning. A trust agreement can avoid probate, maintain privacy, reduce or eliminate estate taxes, and protect minor children. In a blended family, using trust agreements can simplify matters upon the death of a loved one. It provides the legal framework to control asset distribution after death.
For instance, revocable living trusts can be used to distribute assets with greater control and flexibility than a will. Parents can set up separate trusts for children from different marriages. They may also provide for stepchildren and other relatives. Spouses may use trusts to provide for a surviving spouse during their lifetime while preserving the principal for their children.
Appointing Fiduciaries and Guardians Thoughtfully
Typically, spouses choose each other to serve as their personal representatives and trustees. However, with a blended family, choosing neutral individuals to serve in these roles can avoid conflict within the family.
Parents must consider who they wish to designate as guardians for minor children from different relationships. Naming a guardian can be challenging when the child’s other parent is not present or should not have custody. Not all individuals you consider may be willing to help your child maintain their relationship with blended family members.
Navigating Beneficiary Designations and Retirement Accounts
When you enter a blended family, it is crucial to review and update beneficiary designations. Retirement accounts, life insurance, and a few other assets pass directly to a named beneficiary instead of passing through probate. Failing to coordinate estate planning with financial planning could result in unintended consequences.
Preparing for Incapacity and End-of-Life Care
In addition to ensuring your estate strategy distributes your property as you wish, it is essential to consider what would happen if you became incapacitated. Do you want your current spouse to have power of attorney, or should your adult children have this power? Giving your current spouse durable power of attorney could allow them to make financial changes that leave your adult children without the inheritance you intended.
End-of-life planning is another complicated issue in blended families. Many adult children feel as if they have the right to make these decisions for you rather than their stepparents. Creating advanced directives can resolve these issues.
How Borakove Osman LLC Supports Blended Families in Estate Planning
Our Wisconsin estate planning attorneys offer collaborative, compassionate legal services. We tailor strategies based on Wisconsin law and your unique family dynamics.
Only 24% of Americans have wills, despite blended families being more common than ever. Ensure your blended family’s future is protected. Contact Borakove Osman LLC in Madison, WI, to schedule a personalized estate planning consultation.
