Planning for Blended Families


This is Richard Morgan at Morgan and Disalvo. Another in our series of back to the basics video series. This one is a very common topic, and that is planning for a blended family. What’s a blended family? They have at least one spouse that’s married more than once, and there’s children by a prior marriage, either one or both. So here’s what happens: clients come in, they say, here’s what I wanna do, I wanna take care of my spouse when I pass away, and then I want my assets to go to my children, my spouse’s assets to go to their children, at the second death. And then I have the obligation to tell them that’s not actually how it works.

If you were to give all of your assets to the surviving spouse outright, when they own all those assets, all bets are off. Anything could happen to those assets, there is no guarantee your children are gonna get anything, so they don’t really like that answer. So what are the options? We’ve a couple of options, number one, is we have those assets pass to the spouse in trust, so the spouse gets to use those assets when they need them, but when they pass away, the assets come back to your children or whatever proportions you want among the children, because you as the first spouse to die, get to control what happens because you’ve used a trust.

Option number two is, I call it, Taking someone off the table. So you could give the spouse a lump sum of money at that first death and then the rest goes to the kids, or we give the kids a lump at the first death and give the rest to the spouse. That way, at least the kids, we know, got something, so if they never get another dollar, it’s okay cos they got something. And then the spouse, they get to use the assets. Hopefully, they have some come back to the kids, but may or may not happen.

Or you can do the combo, so you could have it where you give the kids a lump so they get something, and then pass the rest to the spouse in trust; they use whatever’s there and whatever’s left comes back to the kids.

So the key is, it’s not simple, you need to think about it, but there are viable options.

Richard Morgan, Morgan and Disalvo.

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