Do you want to play Inheritance Roulette?

This is the first post in a series about family scenarios and situations that place someone in a “higher need” category to get their planning done. Nearly everyone needs to have some kind of estate planning (perhaps a simple will and powers of attorney, for example) in place, but some people absolutely MUST get good planning in place to ensure their estate passes according to their wishes.

Nearly everyone needs to have some kind of estate planning…

Today’s topic is blended families. A blended family is one where at least one of the spouses has a child that is from a prior relationship. So a yours, mine (and maybe ours) situation. In other words, a family that involves step children. This describes a substantial number of families.

A blended family that fails to plan is playing a dangerous game. I call that game Inheritance Roulette. Here’s how the game works:

1. By failing to plan, you spin the wheel of Inheritance Roulette
2. The wheel keeps spinning while both spouses are living
3. At the passing of the first spouse, the roulette ball lands in its spot
4. The winners of Inheritance Roulette are the kids of the spouse that’s still living

Here’s why it works this way. Most spouses hold the majority of their property jointly (think house and bank accounts). What isn’t jointly held typically names the other spouse as primary beneficiary (like life insurance and retirement accounts). This means that when the first spouse passes away, the surviving spouse inherits everything. Now we have all of the couple’s wealth held by the surviving spouse. And because this is a blended family, that surviving spouse’s natural heirs don’t include all of the children in the family. Step children have no natural right to inherit from their step parent.

the children of the first spouse that died get absolutely nothing

So, without the proper planning in place, when the surviving spouse passes away, his or her natural children inherit ALL of the couple’s assets and the children of the first spouse that died get absolutely nothing. I’m serous- nothing. And typically there’s very little, if anything, they can do about it.

Years of meeting with families have told me that the outcome of Inheritance Roulette is not what most families want. But the great thing about Inheritance Roulette is that it’s a voluntary game. You don’t have to play. The problem is, you have to do something to avoid the game. Failing to plan is choosing to play Inheritance Roulette.

If you have a blended family and playing Inheritance Roulette sounds like a bad idea to you, contact my office and setup an appointment. We’ll talk about how to protect your family from this unfair game.