Estate Planning with Stepchildren: How to Face Inheritance Issues

HomeBlogAsset & Legacy PlanningHow to Face Inheritance Issues With Stepchildren

If you’re like most people, you want to provide for your loved ones after you die. This usually means writing a will and possibly opening a trust to distribute assets. However, legacy planning may get complicated if you and your spouse have stepchildren together. With all kinds of disputes, including will and trust contests, the interests of stepparents and stepchildren often collide. Let’s look at how to face inheritance issues with stepchildren.

What to Do About Inheritance Planning

If you’re a stepparent making estate plans, the first thing is to talk to an experienced asset protection and legacy planning attorney with your spouse. They can help you understand your rights and options as a couple and draft a will or trust that takes your children and stepchildren into account. Working together with an attorney can help you decide what is fair for both sets of children, whether you or your spouse passes on first.

Including stepchildren in your estate planning can create problems with your own blood-related children, especially if your stepchildren came into your life as adults. So it’s essential to weigh all the options and understand the consequences before making a decision. An attorney who has seen it all before can give you advice worth its weight in gold.

If you decide not to include your stepchildren in your estate planning, there are still ways to provide for them after you die. You can set up a life insurance policy that names them as beneficiaries or create a separate trust for their benefit. Whatever you decide, talking with an experienced attorney brings the best advice for your situation.

How to Protect your Assets from Stepchildren

If children and stepchildren are adults when you marry, stepchildren may resent the inheriting spouse when their parent dies. You may want to protect your assets for your spouse’s use after your death. However, your children may struggle with this decision if your wife or husband is their stepparent.

One way to protect your assets is by setting up a trust and naming your spouse as the trustee. This way, your spouse controls the distribution of assets after you die. You can also name a third-party trustee to oversee the distribution of assets.

Another way to protect your assets is by setting up a life insurance policy for your children so that they don’t feel left out when your wife inherits the estate. An attorney can help you understand your rights and options as you draft wills and trusts.

Tips for Avoiding Disputes With Your Stepchildren After Death of Spouse

Often, stepchildren will resent a stepparent inheriting everything belonging to their parent. They may feel like the stepparent swooped in and stole their inheritance. This jealousy especially may come out when an older man marries a younger woman who is closer in age to her stepchildren (or vice versa). They may see her as an interloper keeping them from their proper inheritance as heirs of the estate. (1)

Prevening this kind of jealousy and division between your spouse and your children starts with planning well. Working with your attorney to plan carefully can prevent these expensive situations:

  • Will or trust contests: Probate court will challenges are common with disgruntled family members. They may also wrangle the legal system into contesting the terms of a trust.
  • Challenges in probate court: Some children choose to sue an estate into the ground without caring how much it costs for themselves or the named heirs.
  • Accusations of elder financial exploitation: If stepchildren are angry, they may file a civil suit accusing you of taking advantage of an older adult whom you never loved or cared for.
  • Upset over your joint ownership of real property with your spouse: Stepchildren could potentially fight for an ownership interest in the family home they grew up in, even if you inherit it as a joint owner with survivorship rights.

Trusts Can Make the Difference

A trust can be the best path forward to help everyone understand your estate and prevent public disputes about your estate. When you keep assets in a trust, the trustee you choose manages the distribution of assets to heirs. None of the information of a trust becomes public knowledge unless you give the information out.

Avoiding the Public Nature of Probate Court

Without a trust, your will goes to probate court. In probate court, your executor inventories your estate. In estates that go into probate court, there are more often will contests because everyone knows what everyone else inherited. Probate is a public process. Everyone also knows the assets and liabilities of the estate.

Avoiding probate court means opening a trust to hold your assets and writing a pour-over will. A pour-over will allows any assets left out of your trust at your death to pour into your trust. In this way, the trust holds all your assets, and your estate never sees probate court.

Final Thoughts

If you want to plan well and avoid the drama of family disputes, take these steps before coming to any final agreements, writing wills, opening trusts, or talking with children or stepchildren.

  • Talk to an attorney (with your spouse if possible) to understand your rights and options.
  • Talk with your attorney alone if you don’t get along with your spouse or worry they are too irresponsible.
  • Weigh all the options before making a decision.
  • Work together with your spouse, if possible, on your final plan.
  • Consider setting up a trust or life insurance policy naming your spouse or a trusted fiduciary as the beneficiary.

Whatever you decide, talk to an asset protection and legacy planning attorney to get the best advice for your unique situation. Blended families are never the same, and the answers are not clear-cut. Working with an experienced attorney will help you and your spouse foresee potential problems and avert disaster.

We Can Help

At Vail Gardner Law, our experience planning legacies and protecting assets brings you peace of mind as you make your end-of-life plans. We work with all types of families, including blended families with stepchildren, to help you make the best decisions for your unique circumstances.

When it comes to inheritance planning with stepchildren, there is no one-size-fits-all solution. We can help you understand your options and find the best way forward for your family. Contact us today to schedule a consultation. We look forward to helping you protect your legacy.