If you have a blended family, you really need an estate plan.
Many people do not begin to think about estate planning until well after they have started a career, gotten married, or had children. By the time we reach the point in our lives where we begin to think about what will happen to our belongings and our loved ones after we die, we have often already experienced big life changes. For many of us, that could mean multiple marriages and a blended family. So when we sit down to work out our estate plan, how do we navigate the murky waters of estate planning for blended families?
Can I use a prenuptial agreement in an estate plan for my blended family?
Just like with other estate planning tools, a lot of couples do not want to think about obtaining a prenuptial agreement. After all, who can blame an engaged couple for not wanting to think about how their marriage might end? However, just like other estate planning tools, prenups have a bad rap. They can be incredibly useful for couples with a lot of assets, or blended families who want to keep certain properties separate. Through a prenuptial agreement, you and your spouse will be able to delegate which property is joint and which is to remain separate. This can make the division of your assets among your blended family a lot easier in the event one spouse predeceases the other.
What is a Life Estate on property in Tennessee?
A lot of the time, when a couple remarries, one spouse will move into a home owned by the other. If this is the case for you, it may be worth considering a life estate.
What is a Life Estate?
A life estate is an ownership interest in real property for the duration of a person’s life. In other words, a life estate will allow the surviving spouse to continue living in the marital home until the end of their life without them inheriting the house outright or passing it down to their own children.
Blended families are also called step families.
Use a Trust when Estate planning for blended families with multiple children
I want to make sure my children inherit from my estate
In some cases, your spouse may not distribute your estate to your children the same way you would. If you have certain assets or a specific amount of money you wish to go to your children, your best bet is to leave it directly to your children through a trust. Of course, this can be a difficult discussion to have with your spouse, but it may be the best decision for your family.
These are just three estate planning tools to consider for your blended family. There are dozens of others that you, your spouse, and your lawyer may find better suit your needs. Blended families are exciting and rewarding, but it is important to maintain your estate plan through one of life’s biggest changes!
If you’re a blended family with questions about how to create your estate plan in Tennessee, consider contacting an estate planning attorney to discover what is best for your situation.
One of your main concerns when drawing up an estate plan in Nashville will be appointing a guardian for a child in case of death. As a parent, you likely consider “what if’s” every day. Estate planning is no different, especially when it comes to your children. There are multiple considerations to keep in mind when thinking of a potential guardian for your children. We will go over a few of these below.
What if I Am No Longer in a Relationship with My Child’s Other Parent?
Tennessee law presumes that the parents of a minor child are the child’s “natural guardians”. If one parent dies before the other, the surviving parent will usually obtain full custody of the child.
If parentage has not been legally established, you may want to appoint the child’s other parent as the legal guardian in your estate plan. Naming the other parent will ease the transition through the legal system. A court may need to establish a child’s parentage if they were not married at the time of conception and birth. A court will decide a child’s parentage for custody or inheritance purposes.
Hopefully, there are no concerns about your child’s welfare if they need to live with their other parent full-time. However, if you have concerns, consider them objectively and put them in writing. Write down the name of the person you prefer to appoint as the guardian of the minor children. The only way to make sure the other parent does not gain custody is to have their parental rights terminated. This is an extreme measure.
If the surviving parent is the father, a paternity test will be required before petitioning the court for custody. Paternity can be established through a signed birth certificate, an acknowledgment of paternity form, or a blood test. Establishing paternity typically grants a father certain rights in regard to his child. However, paternity is not a guarantee that he will be awarded custody of the child. The court will use its own judgment to determine which guardian would be in the best interests of the child.
What If I Am Married to My Child’s Other Parent, but Something Happens to Us Both?
Generally, the surviving spouse will be granted custody of any minor children. But what happens if you both die? You must consider who you want to care for your children in the event that neither of you is living. Failing to do so could result in confusion and trauma for grieving children.
Many people make the mistake of believing that if you die, the guardian of a child will be granted to grandparents, aunts, or uncles. However, if the will does not specify a guardian, the court may be faced with multiple petitions for guardianship from family members and friends. In this scenario, the judge will choose a guardian with no input from you. So, what should you consider when choosing a guardian for your children?
Who should I consider appointing as a guardian for my children in my will?
Did you know that you can appoint different guardians for your child to manage different aspects of their future? The most obvious guardian is the one who will have custody and take care of your child. This guardian will provide a home and make important decisions for your child. These decisions can be about doctors, schools, and how they maintain relationships with friends and family.
You may also decide to appoint a separate guardian for your child’s financial future. This person would be in charge of the administration of a trust or other financial planning arrangement. If you want to learn more about leaving property to a minor child, read this article.
Whether you appoint one or multiple guardians, you will need to carefully weigh several important factors such as:
Who is the best guardian for your child if you die?
Age and Ability of the Guardian
Your first choice for your children’s custodial guardian might be your parents; after all, they raised you! However, it is important to consider your parents’ age and physical ability to care for your children. This may be especially relevant if your children are younger or have special needs. Similarly, think about your preferred guardian’s emotional ability as well. Appointing your younger sister as a guardian for your child who has yet to finish school or maintain a job may not be the best choice. You will need to choose someone who is both physically and emotionally capable of providing for children.
Religion and Education
If you intend for your children to follow certain religious practices or receive a certain type of education, it is important to choose a custodial guardian who holds your values or who you know will follow through with your wishes. Naming a specific church or school that you want your children to attend does not mean that your custodial guardian will have to obey that wish.
Location of the Guardian of your Child
You will also need to decide if it is important that your children are raised in a certain city or state. In some cases, your desired custodial guardian may not be able to relocate for the sake of your children. In that case, your children may need to move to the custodial guardian’s home or you may need to select somebody else.
Specify each child’s guardian(s) and their role in your will
Finally, be sure to name all of your children in your will, and specify what role you want each guardian to play for each of them. Your attorney may advise you to select both a primary guardian and an alternate guardian. Most importantly, do not forget to ask your guardian if it is okay to name them in your will. As your children age, you may want to change the legal guardian. Ask a qualified attorney to help you modify your will if you want to do this.
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As a parent, you want your child to lead a happy and fulfilling life and have healthy marriages of their own. However, it is hard to ignore the possibility of divorce. No matter how much you may love your child’s spouse, your interest is always in protecting your child. So when estate planning, how can you ensure that your child’s inheritance will not be split with their spouse in a divorce?
Division of property in a divorce will depend upon whether the property is considered “separate property” or “marital property”.
What is the difference between separate and marital property? Separate property is the property that belonged to an individual before marriage. This can include monetary assets, cars, real estate, and sometimes even pets. Marital property, on the other hand, is the property that was acquired or shared during the marriage. So what happens if your child puts their inheritance into a joint bank account? To answer this, we need to discuss how Tennessee law views inheritance.
How does Tennessee view “inherited” property in a divorce?
In Tennessee, inherited money or property is generally considered to be separate property. This means that whether your child inherits before or during their marriage, the court will treat the inheritance as exclusively belonging to your child. They are not obligated to share it with their spouse. However, have you ever heard a long-married couple say “what’s mine is yours, what’s yours is mine?” Many couples treat property this way, which can work well unless the couple decides to separate. This brings me to a very important point:
If your child puts an inheritance into a joint banking account shared with their spouse, it would become marital property subject to division at divorce.
How can you ensure that your child’s inheritance will be divorce-proof, no matter how your child handles the inheritance?
One way to ensure the safety of your child’s inheritance is to set up a Family Trust. In general, a family trust is an estate planning tool that protects your family and your assets. A family trust is a three-party relationship between you (the Grantor), your child (the Beneficiary), and the person in charge of maintaining and distributing the assets in the trust (the Trustee). Through a Family Trust, you will be able to determine how and when your assets will be distributed by the Trustee to your Beneficiaries after your death.
In the divorce context, a Family Trust is a great option because the property is held by the Trustee. This means that on paper, the property from the Trustee will not technically belong to your child. So in the event of a divorce, a court will not consider the assets from the trust for division. Family Trusts are generally flexible and easy to set up, and they are even cost-effective. Of course, if a Family Trust is not right for you, your estate planning attorney will be able to provide alternate options to achieve the same goal!
Do you need a family trust to protect your children’s inheritance?
Of course, nobody wants to believe that their child’s marriage will end in divorce. However, estate planning is all about considering life’s “what if” questions. In the end, setting up a trust for your family will allow you and your child the confidence that their inheritance is safe.
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Every family is different and has different needs. The family unit can be as simple as a married couple or as complex as a blended family with committed partners. Regardless of who makes up your family, you need to ensure that you have adequate legal protection for your partner and any children. This week we will discuss why legal documents like wills, trusts, and powers of attorney are appropriate for unmarried couples and why these documents are important to make sure your family comes first.
How do you plan to care for your life partner in Tennessee?
*One caveat before we discuss what you can do, let me say what you cannot do. You cannot disinherit your spouse. So if you are in a new relationship but still legally married to someone else, your options will be limited. To read more about this topic, click here.
Tennessee does not recognize common law marriage
Many people believe that even without a marriage certificate, couples who live together for a certain number of years and hold themselves out as spouses to the community become “common law married.” Only about ten U.S. states allow common law marriage, and if you meet the requirements for common law marriage in one of those states before moving to Tennessee then you may qualify to inherit from your partner as a spouse, but it would be an uphill battle if anyone challenged your right to inherit as a spouse. The better (and less expensive) option is to create an estate plan.
Siri: Contact a qualified estate planning attorney near me
Make it as official as you can
While there are some rights and privileges that you cannot achieve without the formality of marriage, we can re-create many spousal rights through an estate plan. An estate plan requires evaluating your family situation, your assets, and your wishes to develop legally binding documents that will meet your goals for decision-making during your lifetime and asset transfer upon death.
Most people don’t like to think about their own death or their partner’s, but this is essential to having a solid plan in place. Estate planning is a big part of my Nashville law practice, and here is what I recommend for families choosing to forgo the traditional contract of marriage:
Create appropriate Powers of Attorney in Tennessee
If you are in a committed relationship and trust your partner to make decisions for you, you should both create the appropriate powers of attorney. A Power of Attorney will allow your partner to have decision-making authority in an emergency situation if you are unable to do so. This can include medical and financial powers of attorney. Depending on your personal comfort level, your partner may also be authorized to act on your behalf and at your direction even if there is not an emergency, for example, if you were out of town for something that had to be done in person like a real estate closing.
Create a Will
When you die, your family of origin may feel entitled to an inheritance in favor of your life partner. Without a Will, Tennessee law is on their side. In order to protect the family you have created with your partner, you will need a properly executed Will. A Trust may also be appropriate depending on your situation.
Consider what will be important to your family of origin when you are gone. Will they be upset if you pass family heirlooms to your partner or children who are not legally related to them by blood? Are there significant assets that they expect will “stay in the family?” If so, and assuming it is safe to do so, I encourage you to discuss your wishes with your family of origin and see what provisions can be made for them. It is often easier for your loved ones to accept your wishes if they heard them directly from you, rather than reading them on paper when you are gone.
In order to make sure that your companion receives any inheritance that you would like them to have, you will need to have a Will and make them a beneficiary of whatever share you would like them to receive. I encourage you to speak to your loved one about your resources and how they would be passed in three scenarios- (1) if you die first, (2) if they die first, (3) if you die together in a common accident. Particularly if you have kept your finances separate, think about how you would gain access to each other’s accounts, how long it would take, and how the family would support itself in the meantime.
POD accounts are an excellent way to pass on assets to your unmarried partner.
Add Beneficiary Designations to your accounts
Many types of accounts allow you to add beneficiary designations to them. The most familiar type is life insurance, but there are many others. If you have retirement accounts like IRAs and/or 401k accounts, look at adding your partner as the beneficiary to those funds when you pass. The same can be done with brokerage accounts and bank deposit accounts.
Rather than going through your “estate” as laid out in a Will, the financial institutions holding money for you will essentially cut a check to your beneficiary when they learn that you have died.
And finally….
Think about who depends on you?
You need to consider what might happen to your partner when you pass away. Similarly, how would you care for the family if they were to die or become disabled? How can you ensure that any serious long-term disruption to your family life is a bump in the road (at least financially speaking) and not a train going off the rails?
Whether you make significant earnings at your career or you make valuable contributions within the home or both, your family would be lost without you. That’s why it’s important to have a plan in place. If you are a Tennessee resident committed to helping your family, whether married or not, schedule a call with us to talk about how you can protect your family when they need it the most.
Many people think that if they are married, their spouse will automatically inherit everything when they pass and so they don’t need a will. While there are some situations where a spouse does inherit everything, it is not the default under Tennessee law. In Tennessee, if you are married and have children, your spouse will share your probate estate with your children. I call this the S.A.K.S. method (Spouse and Kids Share). In other words, your spouse does not inherit everything automatically.
To clarify:
If you die without a will, Tennessee law dictates that the spouse and children split the estate.
However, I believe that everyone should create their own plan for distributing their assets after death, even if the state has an understandable default on how to do this. Here’s why:
Having a Will can make it easier for your family to go through probate.
Having a Last Will and Testament can be an important way to reduce any burden on your family after your death. In your Will, you decide not only who will inherit your estate but also key decisions like who will serve as Personal Representative (also known as the Executor) and whether you want to require or waive documents that are required by statutes. Having a Will is your chance to have a say in the probate of your estate before you die. The process can be much less complicated for your beneficiaries as well because you may decide to be even more specific about some of the more difficult decisions that need to be made.
It is much easier on your family if you have an estate plan in place. A last will and testament will provide instructions on how to designate and divide assets between family members and friends. If you die intestate (without a will), then the state’s inheritance laws will determine who gets what.
Preparing an estate plan will cover situations that may arise after your passing
Have you considered what might happen if your spouse remarries? Are you aware that a future spouse can take an interest in a portion of your estate? Would you want part of your assets to go to a new spouse or to any children that they may have with that spouse? Do you have family or children that should benefit instead? There are many other factors to consider, but it’s important to discuss these things with your attorney when you create your estate plan.
A Will provides security for your spouse
If you are more concerned about your spouse inheriting from you than your children, you can plan for that too! The general rule in Tennessee is that the spouse would get no less than a third of the estate.
For example, if you are splitting the estate with two or more children, the spouse would get a third. If there is only one child, the spouse would get half.
What if you want to provide more? With a Will, you can designate that your spouse gets everything or only leave certain things to your children. Many spouses write “I love you” wills, where they inherit first from each other, and then their children only inherit when the second parent dies.
Use a Will to protect spousal inheritance from changes in family dynamics
Another consideration in making a Will is your family dynamic. Do you have children from different relationships throughout your life? Do you have concerns about how your children from those relationships will get along with your current spouse when it comes to your estate? It is important to consider how you want inheritances to be split. Your Will can dictate how your assets will be handled! You can also designate your preference for the guardian of any minor children in the event that both you and the other parent die.
Additionally, a Will provides provisions such as the appropriate age at which your children should take over responsibility for managing any inheritance. One primary concern many parents have is whether young adults will be mature enough to make sound judgments concerning any money they inherit. Your Will can establish a certain age at which young adults gain control of their inheritance, to ensure that it isn’t squandered when you would prefer it be used towards education or sound investments.
In short, your Last Will and Testament should be drafted so that your wishes regarding your family are honored.
A Will can safeguard your beneficiaries if they become disabled
Are any of your assets expected to go to a loved one who has a chronic medical condition? If so, you’ll want to consider that an inheritance could disqualify them from any means-tested government benefits that they may receive or be entitled to, which could be devastating if they are counting on that benefit. The most common examples of this are Supplemental Security Income (SSI) and TennCare (Medicaid). You’ll want to have a contingency plan in your estate plan to make sure that their benefits are secure and not at risk of being cut off due to an inheritance. You don’t want their government assistance to decrease just because you died! You definitely need a plan for that. Make sure to work with a qualified estate planning attorney so you can refrain from making errors with your family’s benefits.
If you want control over who can access your digital assets, you must make a Will
Many digital assets are governed by terms and conditions which are unlikely to specify who will take over your accounts when you die. Some providers, such as Facebook, permit you to designate someone as a “legacy contact.” However, not all companies are robust enough to provide this type of service. A Will protects your digital assets from falling into the wrong hands or being lost in digital space with no one able to claim them. Check out our blog post about how to create or change your Facebook “legacy contact” here.
In conclusion
These are just a few of the things that you’ll want to consider when making an estate plan. I want to encourage you to have a long discussion with your spouse about how your assets should be split when one of you dies. There shouldn’t be any surprises! I cannot stress the importance of knowing each other’s values and putting them in writing. It is crucial to have the outcome you desire. A failure to plan can end up in expensive court litigation. This is why we encourage everyone to speak with an experienced estate planning attorney about how they and their spouse can protect each other through proactive planning.
Are you ready to make your Will? Schedule a free initial call and make your plan with the Team at GALS!
