Elder Law Estate Planning Family Law Legal Topics

Estate Planning in a Blended Family

Blended families are very common today—from the Kardashians to the Jolie-Pitts, Hollywood has myriad examples. In a blended family, there are children from a prior relationship and also perhaps children with the current spouse. This situation presents many blessings and challenges, including those for estate planning attorneys. Even if your clients’ assets are modest, planning for them in the context of the “blended family” requires careful analysis.

When dealing with a blended family situation, beware of a conflict of interest. In the estate planning arena, it’s common for the attorney to represent both spouses. This joint representation is based on the assumption that there isn’t any actual conflict of interest between the spouses and there’s no confidentiality as to communications between the attorney and either or both clients. If the clients execute an informed written waiver under Cal Rules of Prof Cond 3-310(C), the attorney can take on this joint representation.

But the position of advisor to both spouses requires particular scrutiny when dealing with a blended family. The complexity of the various relationships may result in potential conflicts that make joint representation inappropriate. For example, if each spouse has children by a prior marriage whom he or she intends to be the primary beneficiary of his or her estate, it may be difficult for one attorney to advise both parties. The divergence in objectives may be too pronounced for joint representation to be feasible or even sensible.

If joint representation won’t work, the only option may be for each spouse to have separate counsel who will assist the clients in either structuring a joint estate plan or separate plans.

Another big issue when dealing with blended families has to do with the characterization of assets. If either client has previously been married, it’s likely that their assets will include both community and separate property:

  • assets they acquired during the present marriage will be treated as community property (Fam C §760), and
  • assets received as the result of the termination of a prior marriage, whether by death or dissolution, will be characterized as separate property (Fam C §770).

Even if the clients executed a premarital agreement before their current marriage that defined their separate and community property interests, it’s quite possible that the nature of the assets has become confused over time due to mistitling, commingling, or intentional conversion of the character of the assets from separate to community or from community to separate. See Fam C §850.

To deal with asset characterization issues, ascertain at the outset the precise character of the clients’ assets through,  e.g., account statements and deeds, and include in the estate plan an agreement that delineates the community and separate property assets. Because preparation of the agreement requires an understanding of family law principles, you may need to hire a family law practitioner to assist with that task.

Estate planning issues that arise in the throes of separation or dissolution are covered in CEB’s book Crossover Issues in Estate Planning and Family Law.

Also check out CEB’s Complete Plans for Small and Mid-Size Estates (chap 4) on creating estate plans for difficult family situations and issues related to marital agreements in California Marital Settlement and Other Family Law Agreements.

© The Regents of the University of California, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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