Estate Planning for Blended Families

In a traditional family, the estate is usually passed down to the deceased’s spouse and then to their children. This becomes more complicated, however, when stepchildren and stepparents are involved.

Whenever the terms ‘children’ or ‘spouse’ come up in estate planning, it’s important not to assume their meaning. Make it clear exactly which children are being provided for, including biological children, adopted children, stepchildren, children from your current relationship, and children from previous marriages or relationships.

In this post, we discuss three legal tools that you can consider to address your blended family situation in your estate planning.

#1: Mutual Wills Agreement

A Mutual Wills Agreement can be a useful tool for estate planning with blended families. It is a legally binding agreement between two parties (often spouses) that they will not revoke or alter their wills without the other’s consent. It can be used in blended families to ensure that the surviving spouse will still honour the deceased’s estate plan for the deceased’s biological, adopted, or stepchildren.

Mutual wills are often conflated with ‘mirror wills’, wills that can be altered unilaterally by either party at any time without the other’s consent or knowledge.  

#2: Testamentary Trust Wills

There is a common belief that Testamentary Trust Wills are only used by individuals with a high net worth, and that everybody else will be just fine with a Simple Will. However, this is a misconception.

Many blended families use a testamentary trust because of the flexibility and control that it provides. Directing your assets to be held in trust by a trustee, rather than distributing them directly to beneficiaries, provides an extra layer of protection. A testamentary trust can help prevent a surviving spouse from excluding your children from a previous relationship from the inheritance, provides control over when and how each of your children receives assets, and protects assets for your children if your surviving spouse remarries.

#3: Life Insurance

Life insurance can be a direct way of helping to ensure that all of your children are provided for because it provides immediate capital outside of your estate. Life insurance death benefits are paid directly to named beneficiaries and generally do not form part of the estate, which can help reduce the risk of disputes over asset distribution.  

If you have any questions about estate planning for your unique family situation, please do not hesitate to contact me. I am here to help.

DISCLAIMER: This article is for informational purposes only and does not constitute legal advice.