Blended families, or individuals with multiple children from previous relationships, will have unique considerations when it comes to preparing their estate plan. However, many individuals fail to update their estate plans when they remarry or, worse still, go into a new relationship without an estate plan. The result could be a disaster for your heirs. 

The Sacramento estate planning attorneys at Wagner Family Law can help those with blended families devise an actionable estate plan that meets the needs of both current and future children. You don't want to leave your children with a ball of confusion to unravel if you should pass. An estate planning attorney can help. 

What Happens if You Proceed Without an Estate Plan?

The worst thing you can do is proceed without any estate plan whatsoever. If you do, your assets will pass through probate and be distributed by a process known as intestate succession. Intestate succession is an algorithm that distributes property in accordance with a process. Spouses are generally favored first, with kids and others coming second. Suffice it to say the probate court makes the decision on how to proceed. This can take a long time, be incredibly costly, and often results in battles between family members. This only gets worse with a blended family. 

You can avoid probate entirely by using trusts to move your assets when you pass. Trusts streamline the process of getting your assets to your heirs. Probate can take up to 16 months or longer, in some cases, when there are fights among heirs over property. Establishing a living trust can also prevent you from having to pay probate fees, which can get quite expensive. The probate fees on a $1 million estate can easily eclipse $33,000. So, investing in trusts will save you money in the long run. 

A Case Study for Second-Marriage Inheritance Issues

To proceed, we need an example. Let's consider the case of Husband and Wife. Husband and Wife are two divorcees. Husband has a single minor child from a previous marriage. Wife has no minor children (yet). Husband and Wife own a home together, own rental property, have life insurance, and a retirement plan. Husband also has a piece of land and an investment account that he inherited and are held in his name alone. 

Of course, Husband wants to ensure that all of his children, both present and future, are cared for in his estate plan. Right now, Husband and Wife have plenty of assets but no plan. 

As Sacramento estate planning attorneys, our job is to help Husband devise an estate plan that ensures everyone in his life is taken care of according to his wishes. That includes his child from the previous marriage and any future children he may have with his new wife. 

Characterization of Property

California recognizes three types of property when it comes to marriages. Those are community property, separate property, and commingled assets. Community property refers to any property (real or personal) or debt that was acquired during the marriage. It is, therefore, considered property of the marital estate. Separate property is considered property of the individual, either Husband or Wife. This is property that was owned prior to the marriage or gained as an inheritance. Commingled assets are those that began as separate property (like a bank account) but then were commingled with marital funds, making the matter much more complex. 

Commingling Assets in Blended Families

Commingling assets can make things extremely complex. As an example, let's say that Husband and Wife want to sell their home and buy a bigger one. Husband owns a piece of land separately from an inheritance. Husband sells off the piece of land and uses the money to make a down payment on the new home. According to Husband's estate plan from a previous marriage, all his inherited property was left to his child from his first marriage. What happens if Husband dies?

Is his child from a previous marriage entitled to a portion of his new house since they were set to inherit the land used to pay for the home? Is Wife still entitled to her portion of the house if Husband dies? This is a complicated issue. It will take time for the probate courts to unravel which property should go to whom. It's definitely not a situation you want to leave unaddressed. 

Can a Will Solve Husband and Wife's Problems?

A will is a set of instructions to the probate judge on what you would like to see happen to your assets when you pass. It doesn't mean that the probate judge is necessarily going to follow your wishes. This is especially true if your estate plan is out of date and reflects the interests of a previous marriage. What you need is a trust set up for your heirs, which distributes your assets directly to them once you pass. A trust completely circumvents the probate court entirely. It can distribute assets to your heirs in a clean, fast, and simple manner. 

How Can a Trust Help Husband and Wife With Their Estate Plan?

Well, as an estate planning attorney, we would advise Husband and Wife to update their estate plan as soon as a major life change occurs. This will prevent many of the problems we have discussed previously. Big life events such as births, deaths, divorces, marriages, inheritance, and more are all sound indicators that you need to update your estate plan. Husband and Wife should have considered updating their estate plan once they were married, and then again once their first child was born. 

If Husband leaves everything to Wife, will Wife honor Husband's obligations to his child born from a previous marriage. There's a good chance that Wife puts her own children and needs ahead of Husband's former relationship. If Husband wants his child from a previous marriage cared for financially should he pass, then he needs a vehicle to distribute assets directly to him. This is the main benefit of a trust. 

Talk to a Sacramento, CA Estate Planning Attorney Today

Wagner Family Law represents the interests of individuals who are remarrying, undergoing major life changes, or otherwise need to update their estate plan. Call our office today to schedule an appointment, and we can begin discussing your wishes right away.