Married couples in Minnesota with children from earlier marriages or relationships face questions on deciding fair inheritances. More blended families and remarriages later in life make estate planning even more important for parents.
Ill-will and possible litigation can follow insufficient estate planning. For example, a surviving parent could leave out stepchildren from the proceeds of a life insurance policy, because the divorce decree carries more weight than changes in the policy. Or, a surviving spouse may have a limited inheritance because the assets are transferred to the deceased spouse’s children.
Parents should have a will drafted to help eliminate rancor among the children after their death. They can also have a living trust created for their children in the event they predecease each other. The couple may be able to agree that they their children and stepchildren will receive equal amounts and that they will not change their wills to leave more property to their own children. The will can specify that a child’s share of an inheritance must be used for the education of loved ones or for a down payment on a house.
Because the will governs probate assets, heirs can directly inherit the family home, a 401(k) plan or other accounts with named beneficiaries without conditions. When the fist spouse dies, their living trust becomes irrevocable and can specify that the funds can support the surviving spouse or held solely for the children or stepchildren.
Failure to draft any will can also have tremendous consequences on the parents’ wishes. Minnesota’s intestacy laws will control who receives the parent’s assets and the stepchildren may end up disinherited.
Preventing family disputes and ensuring that wishes are carried out takes planning. An attorney can help ensure that wills, trusts and other estate documents are properly drafted in accordance with the parents’ intent.
Source: MarketWatch, “How should parents divide their assets between their children and stepchildren?” Quentin Fottrell, June 13, 2017