Wealth Transfer Planning Do’s and Don’ts for Blended Families

When marriage joins two families, what happens to the spouses' estates? Take these steps to help minimize any potential issues.

multigenerational blended family after remarriage

Estate planning is an important step for any family, but it can be a touchy subject. For blended families—families where one or both spouses bring children into the new relationship—conversations about wealth transfer planning can be even more complex.

Despite the complexity, the conversation is crucial for both spouses and children. To help make the process easier, Katie Kellen, Senior Vice President – Wealth Advisor at Wells Fargo Private Bank, shares some do’s and don’ts to guide your planning.

DON’T make estate planning one spouse’s project.

In many families, one spouse is primarily responsible for managing finances—but you both need to participate in this planning process. “Estate planning really should be a joint project,” Kellen advises. That way, you and your heirs can feel comfortable with the planning that went into the decisions. (Learn more in “Essentials of Wealth Transfer.”)

DO commit to honest, open communication.

“Spouses in blended families can be reluctant to approach the subject of estate planning,” says Kellen, “but they need to explore this subject together for the benefit of the others involved.” To that end, Kellen recommends that spouses discuss the issues thoroughly before bringing kids into the conversation.

“Spouses in blended families can be reluctant to approach the subject of estate planning, but they need to explore this subject together for the benefit of the others involved.” —Katie Kellen, Wealth Advisor, Wells Fargo Private Bank

DON’T think it’s all about the money. 

“Talking about estate planning is about more than who gets what,” says Kellen. Although your kids may not feel comfortable asking, it’s likely they have concerns about your long-term care, your business, or your legacy. “It’s an important time to reassure your kids that you have planned for the future.” (For more, listen to our podcast “Sharing Your Estate Plans With Your Family.”)

DO review your current planning documents. 

Examine what’s already in place for each spouse. You may be surprised that wills, life insurance policies, retirement plans, or other items include former spouses or information that you’ll need to update. A conversation with your advisors at Wells Fargo Private Bank and your tax and legal advisors can help you determine how to address changes so that you have the appropriate wealth transfer tactics in place for your needs.

DON’T keep the plan to yourself. 

Share your intentions with your children so they’re not surprised in the middle of any unexpected and stressful life event. Managing expectations can help smooth potential issues with family dynamics down the line. If you are not comfortable sharing your overall net worth, you may want to start by sharing the structure and reason behind the plan but not necessarily the actual assets at the first meeting.

DO make the decision that’s right for you.

Should all kids get the same slice, regardless of bloodline? How do kids’ special needs or individual circumstances come into play? If the spouses enter the marriage from different financial levels, what does that mean for the children? There are many legitimate ways to divide your assets; the key is to choose a model that works for you and your new spouse. In addition, don’t forget to include family heirlooms and items of sentimental value.

DON’T construct a plan and then forget about it.

Estate plans are not one-time exercises. Kellen recommends that you regularly review plans over time, and especially as legislation and family changes take place.

DO call in some help. 

Your financial professional can help facilitate this complex discussion. “Sometimes, we can give couples a few simple questions to discuss together over a few weeks,” Kellen explains. The conversations that take place can become the basis for a full estate plan. Consider introducing your children to your wealth team at this point, too. “Making sure the beneficiaries know who we are and are comfortable with us becomes very helpful in the future,” Kellen says.

Michael W. Brough is a Texas-based writer whose work has appeared in The Wall Street Journal, The Washington Post, USA Today, and other outlets. Image by iStock

What can Wells Fargo do for you?

As you think about your legacy and wealth transfer goals, take time to sit down with your wealth management professional and outline your vision.

Wells Fargo and Company and its affiliates do not provide legal advice. Wells Fargo Advisors does not provide tax or legal advice. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.

This information is provided for educational and illustrative purposes only.

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