Estate Planning for the Modern Family

February 27, 2019

Families of the 21st century are nothing like the traditional families of the 1950’s. According to the latest U.S. Census, 1300 new stepfamilies are forming every day. About 83% of remarried men and 76% of remarried women are now living in households with stepchildren. The divorce rate in the U.S. is currently over 50%. The data paints the picture; families of the 21st century are blended families.

In being a part of a blended family, understand that your estate planning must be a unique blend as well. The language in your estate plan must specifically state who you want to include and who you want to exclude from your estate. If you do not have a properly drafted estate plan including a Last Will and Testament (“Will”) or a Trust, Florida law will decide how your property gets distributed at your death. Keep in mind that Florida law does NOT make any provisions for unwed domestic partners or stepchildren. Therefore, it is critical to draft your estate plan according to your personal wishes, and not leave it up to Florida law to decide.

Our estate planning attorneys can help you get organized and provide peace of mind. We recommend these estate planning documents, as well as tips on planning within a blended family:

A Durable Power of Attorney and Health Care Surrogate

The Durable Power of Attorney allows you (the “principal”) to select a person (the “agent”) to “step into your shoes” if you become mentally or physically incapacitated. With a properly executed Durable Power of Attorney, the agent will be able to make legal and financial decisions on your behalf. This includes specific powers such as transacting business with your financial institutions, carrying out real estate transactions such as buying and selling real property, insurance transactions, retirement plan management, and the power to qualify for public benefits… just to name a few.

A Health Care Surrogate allows you to plan ahead for difficult medical decisions. It allows you to name someone (the “agent”) that will make health care decisions for you in case you are unable to make them yourself. This is crucial because it prevents disagreements within the family as to who should make these critical decisions. Such decisions include consenting to certain medical procedures, seeking a second opinion, obtaining medical records, or transferring you to a different medical facility.

The time to create these types of documents is NOW, while you are still capable of making your own decisions and planning ahead. Blended family members must specify who they wish to nominate in these documents because Florida law generally does not grant this authority unless the individual is related through marriage, bloodline, or adoption. Therefore, you must put your wishes in writing. Remember that the best agents are going to be those who are the closest to you, and who you know will make the best decisions for your overall well-being.

A Living Trust

A “Living Trust” is a primary estate-planning document that is used in place of a Last Will and Testament (“Will”). Assets are then transferred into the Trust. Trusts are used to by-pass probate. This means that upon your death, all assets in the Trust pass to the beneficiaries through the Trust, and not through any court process. (The people or charities you designate are called beneficiaries).

Trusts can provide your beneficiaries with asset protection. Upon inheriting any monies or assets through a Trust, the beneficiary enjoys financial protection from future creditors, divorces, and bankruptcy. This is typically why a Trust works best for those in blended families.

A Trust can be helpful in removing and adding beneficiaries to your blended family. You could specifically mention your domestic partner as a backup Trustee or a beneficiary. The same reasoning would apply for any stepchildren which you have not legally adopted.

Last Will and Testament

A Last Will and Testament (“Will”) is an important estate-planning document that, although losing in popularity to a Living Trust, can still provide crucial financial organization. Wills are used to designate who should receive your assets upon your death. Wills allow you to appoint someone to become “Personal Representative” of your estate. This person will be responsible for carrying out your last wishes according to what you wrote in the Will. If you have minor children (those under 18 years of age in Florida), you can appoint a Guardian(s) who will care for them in case of your death. This reduces lawsuits that arise over custody in cases of sudden or unexpected death.

For your Will, you must specifically designate your Personal Representatives and goals for your estate. Your Personal Representatives could be your biological family members or just someone you trust. Your beneficiaries must be explicitly stated. For example, if you wish for your stepchildren and extended stepfamily to inherit part of your estate, you must specifically list them as beneficiaries, otherwise they are not entitled to your inheritance.

Some Important Tips for Estate Planning in Blended Families:

  • Consider a Prenuptial Agreement with your spouse.

A Prenuptial agreement (or premarital agreement) is solely for the protection of both of your estates, in the event of divorce. Signing a prenuptial agreement may help to create the foundation to your estate plan, especially when children of subsequent marriages are involved.

  • Update your estate plan during any life changes.

If you created your estate plan during your previous marriage, then it is vital to update your estate plan. This is especially the case when you have a Power of Attorney that grants your prior spouse access to your legal and financial affairs. Any major life changes such as marriage, divorce, birth of a new child, or death in the family require a review of your estate planning documents.

  • Add a survivorship clause in your estate plan.

In Florida estate plans, a survivorship clause is generally a 30-day period in which designated beneficiaries can receive your estate. If they do not survive you past 30 days, then their inheritance will be sent to the alternate beneficiaries. However, this situation will not happen without a survivorship clause. A prime example of this is if you designate your child from a previous marriage. If you do not include a survivorship clause and the child does not survive you by 30 days, then their inheritance will be sent to their “next of kin,” which could mean your ex-spouse. This is typically not the situation most want for their estate plan.

Our attorneys experienced in estate planning can work with you to create a plan that is tailored to your family’s status quo. Contact OC Estate and Elder Law at (954) 251-0332 or to get started with your free consultation. Our attorneys are fluent in English, Spanish and Russian.