Estate Planning Tips for Blended Families by Kathleen Marteney, CRPC

Posted on January 05, 2016 by Richard Berkowitz

When second marriages result in the blending of two families, a complicated financial picture may emerge. Couples coming into a second or third marriage bring with them ex-spouses, children from previous relationships and financial responsibilities, assets and liabilities that may carry deep emotional attachments.   Addressing these delicate issues from the onset will help newly blended families avoid a rocky road of financial disputes in the future. Following are some key points to consider:

Communicate. Disagreements over finances are a common source of marital discord. Spouses may enter a marriage with different financial assets, responsibilities and spending habits. Moreover, both parties should take an honest assessment of the new family dynamics their union will create, and identify potential challenges that may arise in the future should blended family members fail to get along or should the death of one spouse result in a change in a child’s inheritance. Tackling these issues early on may help to lay the foundation for a financially harmonious future.

Draw Up a Prenuptial Agreement. While far from being romantic, prenuptial agreements are an important instrument in the blended family tool box. Not only can they help to open dialogue about who is coming into the marriage with what, they also allow both parties to articulate their concerns, goals and responsibilities and establish a plan for division of property in the event of divorce. More specifically, they can protect one spouse in the event of the other’s passing and safeguard inheritances for one’s children.

Review and Update Estate Plans. While engaging in open dialogue, it’s a good idea to document the assets both parties bring into the marriage and the value of those assets, which may or not become the subject of property divisions should the couple later divorce. A new marriage may require updates to beneficiaries on wills, insurance plans and retirement accounts. Both spouses may also consider changing who gets what in an inheritance and when, should one spouse pass away.

Create a Trust. Putting assets in trust can accomplish several goals, not the least of which includes shielding assets from creditors and from public record upon the death of one spouse. For the blended family, a trust provides the grantor the ability to direct how assets should be distributed and shared among a surviving spouse, biological children and step-children. They may also contain specific language spelling out how beneficiaries may or may not spend inherited assets.

With a qualified terminable interest property (QTIP) trust, the grantor may provide lifetime income to a surviving spouse while preserving underlying trust assets for the benefit of his or her children.

Another option is to fund an irrevocable life insurance trust (ILIT), which purchases a life insurance policy and becomes both the policy holder and beneficiary, which, in turn, allows death benefits to pass into the trust free of both federal estate and income taxes.

Estate planning for blending families is a complex endeavor that should be undertaken with the guidance of experienced financial advisors who can help develop a plan that addresses the unique tax, financial and emotional implications of one’s decisions.

About the Author: Kathleen Marteney, CRPC, is a registered representative with Raymond James Financial Services and a financial planner with Provenance Wealth Advisors, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants. She can be reached at 800-737-8804 or via email at

Provenance Wealth Advisors, 200 S. Biscayne Blvd., Miami FL 33131 (954)712-8888

Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kathleen Marteney and not necessarily those of Raymond James. You should discuss any tax and legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.