5 Estate Planning Mistakes Blended Families Should Avoid in Virginia

Second marriages and blended families can bring a new chapter of life, but they can also make estate planning significantly more complicated.

If you are remarried and have children from a previous marriage or relationship, you may be trying to accomplish several things at once. You may want to make sure your current spouse is financially secure. You may also want to protect an inheritance for your children. You may own a home together, have separate property you brought into the marriage, maintain retirement accounts or life insurance policies, or have assets you specifically want to remain within your side of the family.

Without careful planning, those goals can conflict.

Estate planning for blended families in Virginia is not simply about deciding who receives your property. It is about coordinating wills, trusts, beneficiary designations, property ownership, and long-term instructions so the plan reflects what you actually intend.

Below are five estate planning mistakes blended families should consider avoiding.

1. Assuming Virginia Law Will Automatically Divide Your Estate the Way You Would Want

One of the biggest mistakes a blended family can make is assuming that family members will simply “work things out” or that Virginia law will distribute an estate in a way that feels fair.

If you die without a valid estate plan, Virginia’s intestate succession laws determine who receives probate property.

This is particularly important for families in which one spouse has children from another relationship.

Under Virginia law, when a person dies without effectively disposing of property by will and is survived by a spouse and children or descendants, at least one of whom is not also a child or descendant of that surviving spouse, the statutory division generally provides one-third to the surviving spouse and two-thirds to the decedent’s children and descendants. Virginia applies the same proportions to the surplus of an intestate personal estate after applicable expenses, debts, and statutory provisions.

That result may or may not reflect what the deceased person actually wanted.

For example, someone may have intended to:

• Allow a surviving spouse to remain in the family home

• Provide the spouse with income throughout retirement

• Preserve certain assets for children from a previous marriage

• Provide differently for adult children based on their circumstances

• Leave a specific inheritance to a stepchild

• Preserve a family business, investment property, or other legacy asset

• Treat certain children equally while making separate provisions for others

Intestacy laws are designed to provide a default result. They are not designed around the personal dynamics, relationships, finances, or goals of a particular blended family.

A properly designed estate plan allows those decisions to be made intentionally rather than leaving them to Virginia’s default rules.

What about stepchildren?

This is another area where assumptions can create problems.

Family relationships and legal inheritance rights are not always the same thing. If you consider a stepchild your own and want that person included in your estate, the safest approach is to address that intention expressly in your estate planning documents instead of assuming the law will produce the result you want.

For a blended family, specificity matters.

2. Leaving Everything Outright to a Surviving Spouse and Assuming the Children Will Inherit Later

This is perhaps the most important estate planning issue for many blended families.

A common plan sounds simple:

The problem is that once property is transferred outright to another person, the original owner generally no longer controls what happens to it.

A surviving spouse's life may change significantly after the first spouse's death. The surviving spouse could:

• Remarry

• Create a new estate plan

• Change beneficiaries

• Spend or gift assets

• Acquire new financial obligations

• Combine assets with a new spouse

• Experience creditor or financial issues

• Decide to distribute assets differently than originally discussed

None of those possibilities necessarily involve bad intentions. They simply illustrate why an informal understanding between spouses is not the same thing as a legally structured estate plan.

How a trust can help a blended family

This is where trust planning for blended families can become particularly valuable.

A trust can allow the person creating it, known as the settlor, to establish detailed instructions regarding how trust property should be managed and distributed.

For example, a plan may be designed so that certain trust assets are available for the benefit of the surviving spouse during his or her lifetime while the remaining assets are ultimately preserved for the settlor's children from a previous relationship.

Depending on the terms drafted into the trust, the plan may establish:

• Which assets are available to the surviving spouse

• Whether the spouse receives income, principal, or both

• Under what circumstances distributions may be made

• Whether distributions are made outright or by a trustee

• Who serves as trustee

• Whether the spouse may serve as trustee

• Which assets remain protected for children

• When children ultimately receive their inheritance

• What happens if a child predeceases the settlor

• Whether descendants of a deceased child receive that child's share

Virginia law recognizes revocable trusts and generally allows the settlor of a revocable trust to amend or revoke the trust during life unless the trust provides otherwise. After the settlor's death, the trustee administers and distributes property according to the trust terms, subject to applicable law.

This is the important distinction Rob described from his practice:

A trust can potentially provide financial support for the settlor's surviving spouse without simply transferring complete control of every asset to that spouse. Proper drafting can preserve the remainder of the trust for the settlor's children rather than allowing those assets to become part of a future spouse's estate plan.

That ability to separate lifetime support for a spouse from ultimate inheritance for children is one of the reasons trusts can be especially useful in estate planning for second marriages and blended families.

3. Updating Your Will but Forgetting Beneficiary Designations and Other Non-Probate Assets

Creating a new will after remarriage is important, but a will does not necessarily control every asset you own.

Many significant assets can pass through mechanisms outside the will.

Examples may include:

• Life insurance

• Retirement accounts

• Certain investment accounts

• Payable-on-death accounts

• Transfer-on-death accounts

• Jointly owned property

• Assets already titled in a trust

This means a beautifully drafted will can still produce an unexpected result if the rest of the financial picture does not match it.

Imagine that someone updates a will to provide for a new spouse and children but never reviews the beneficiary designation on a large retirement account.

The beneficiary designation may determine who receives that account regardless of what the will says.

Divorce does not mean you should ignore old beneficiary designations

Virginia law contains provisions addressing certain beneficiary designations following divorce or annulment, but the statute itself recognizes exceptions, including circumstances involving federal law. Virginia divorce decrees are also required to warn parties that beneficiary designations payable to a former spouse may or may not be automatically revoked and that individuals who intend to change a beneficiary should follow the provider's instructions.

In other words:

Do not rely on divorce alone to clean up your estate plan.

After divorce, remarriage, or another major family change, review beneficiary designations directly.

A blended-family estate plan should coordinate the entire picture

An estate planning attorney may need to review not only the client's will or trust, but also:

• Beneficiary designations

• Ownership of real estate

• Joint accounts

• Retirement accounts

• Life insurance

• Business interests

• Investment accounts

• Existing trusts

• Prior estate planning documents

• Divorce agreements

• Prenuptial or marital agreements

The goal is to make sure these pieces work together rather than accidentally contradicting one another.

4. Failing to Update an Estate Plan After Marriage, Divorce, Remarriage, or Other Major Life Changes

An estate plan should change when life changes.

This is especially important in a blended family because marriage and divorce can affect legal rights in ways that may not be obvious from reading an old will.

For example, Virginia law provides that divorce or annulment generally revokes certain provisions in a will benefiting a former spouse, as well as certain appointments of the former spouse, unless the governing document provides otherwise.

But remarriage creates a different issue.

Virginia law also protects, in certain circumstances, a spouse who married the person after the existing will was signed. An omitted spouse may be entitled to the share he or she would have received through intestate succession unless the will or a valid premarital or marital agreement demonstrates that the omission was intentional.

That is a perfect example of why relying on an old estate plan can be risky.

When should you review an estate plan?

Consider reviewing your estate planning documents after:

• Marriage

• Remarriage

• Divorce

• Birth or adoption of a child

• Birth of grandchildren

• Death of a beneficiary

• Death or incapacity of an executor or trustee

• Significant change in assets

• Purchase or sale of real estate

• Starting or selling a business

• Moving to another state

• Major changes in family relationships

Even if none of those events occur, periodically reviewing an estate plan can help determine whether the documents still reflect your intentions.

5. Treating a Blended-Family Estate Plan Like a Standard “Simple Will”

Not every family needs an elaborate trust structure.

But blended-family estate planning deserves a deeper conversation than simply asking:

“Who gets my property when I die?”

A better planning process asks:

How much should my spouse receive?

Some people want their spouse to inherit everything. Others want to provide enough for housing and living expenses while preserving substantial assets for children.

Neither approach is automatically right.

The plan should reflect the particular family's finances and relationships.

Should my spouse receive assets outright or through a trust?

An outright inheritance gives the surviving spouse substantial freedom and control.

A trust may provide more structure and may help preserve property for children or other beneficiaries after the spouse's lifetime.

Who should serve as trustee?

This can be especially sensitive in blended families.

Naming a surviving spouse as trustee may offer convenience, but naming an independent trustee or co-trustee may provide additional separation between the spouse's interests and the interests of children from another relationship.

The right arrangement depends on the family.

What happens to the home?

For many families, the residence is one of the largest assets.

A plan may need to address questions such as:

• Can the surviving spouse continue living there?

• For how long?

• Who pays taxes, insurance, and maintenance?

• Can the home be sold?

• What happens to the proceeds?

• Do children eventually inherit the property?

• Is the home jointly owned?

• How is the property titled?

Leaving these questions unanswered can create tension between a surviving spouse who wants security and children who believe the property represents part of their inheritance.

When should children receive their inheritance?

An estate plan does not always have to provide an immediate lump-sum distribution.

Trust provisions may allow assets to remain managed for a beneficiary until certain ages or circumstances, depending on the family's goals.

What if the surviving spouse remarries?

This is one of the most important questions in blended-family estate planning.

If assets were left outright to the surviving spouse, those assets may ultimately become part of that spouse's own estate and planning decisions.

By contrast, properly structured trust planning may allow someone to benefit a surviving spouse during life while directing the remaining property to the original settlor's children when the spouse dies.

That distinction is often at the heart of estate planning for blended families in Virginia.

A Virginia Surviving Spouse May Have Rights Even When There Is a Will

This is another reason blended-family estate planning should be carefully structured.

Virginia law provides a surviving spouse with certain statutory protections. For people dying on or after January 1, 2017, Virginia's elective-share system generally allows a qualifying surviving spouse to claim an amount equal to 50% of the marital-property portion of the augmented estate. The marital-property portion is calculated using a statutory percentage that increases based on the length of the marriage.

This means estate planning cannot always be approached as simply:

The surviving spouse's statutory rights, property ownership, beneficiary designations, trust assets, marital agreements, and other factors may all need to be considered.

For blended families with competing goals, this is one reason individualized legal advice can be especially valuable.

A Blended-Family Estate Planning Checklist

If you are remarried or have children from a previous relationship, consider discussing the following with an estate planning attorney:

• Do I have a current will?

• Should I consider a revocable living trust?

• Does my plan provide appropriately for my current spouse?

• Does it protect the inheritance I want my children to receive?

• What happens if my spouse remarries after my death?

• Are my beneficiary designations current?

• Is my former spouse still listed anywhere?

• How is my home titled?

• How are my bank and investment accounts titled?

• Who should serve as executor?

• Who should serve as trustee?

• Are there potential conflicts between my spouse and children?

• Have I specifically addressed stepchildren I want to include?

• Do I have a durable financial power of attorney?

• Do I have a current Advance Medical Directive?

• Have I reviewed retirement accounts and life insurance?

• Does my estate plan coordinate with any prenuptial, postnuptial, or divorce agreement?

• Have I clearly documented who ultimately receives family property?

The answers may reveal gaps that are difficult to see by reviewing a will alone.

Frequently Asked Questions About Estate Planning for Blended Families in Virginia

Do I need a trust if I have children from a previous marriage?

Not necessarily. Every family and estate is different.

However, a trust may be especially useful when someone wants to provide for a surviving spouse during the spouse's lifetime while preserving certain assets for children from a previous relationship.

The appropriate structure depends on the family's assets, goals, relationships, and legal circumstances.

Can I leave money to my spouse but make sure my children eventually receive it?

Trust planning may provide a way to accomplish that goal.

Instead of giving assets outright to the surviving spouse, a trust can establish rules governing how the spouse benefits from the property during life and who receives the remaining trust assets after the spouse's death.

The specific terms matter considerably, which is why this type of planning should be individually drafted.

What happens in Virginia if I die without a will and have children from a previous marriage?

If a Virginia resident dies intestate and is survived by a spouse and by children or descendants, at least one of whom is not also a child or descendant of the surviving spouse, Virginia law generally provides one-third to the surviving spouse and two-thirds to the deceased person's children and descendants.

That statutory distribution may differ considerably from what someone would have chosen personally.

Does my will control my life insurance and retirement accounts?

Not necessarily.

Assets with valid beneficiary designations may pass according to those designations rather than according to the terms of the will. That is why beneficiary designations should be reviewed as part of the overall estate planning process.

Should I update my estate plan after getting remarried?

Yes, remarriage is an important time to review an estate plan.

Existing wills, trusts, powers of attorney, Advance Medical Directives, beneficiary designations, account ownership, and real estate ownership should all be reviewed to determine whether they still reflect your wishes.

Can my current spouse change what my children ultimately inherit?

It depends on how the estate plan is structured.

Assets given outright to a surviving spouse generally provide that spouse with much greater control over what ultimately happens to them. Trust planning can provide additional control by defining what the surviving spouse may receive while identifying who receives remaining trust assets later.

Thoughtful Estate Planning Can Protect Both Your Spouse and Your Children

Estate planning for a blended family does not have to mean choosing between your spouse and your children.

With thoughtful planning, it may be possible to provide financial security for a surviving spouse while also protecting the inheritance you intend to leave to children from a previous relationship.

The key is making those decisions before they become someone else's decisions to make.

A carefully coordinated plan may include a will, revocable living trust, beneficiary designations, durable financial power of attorney, Advance Medical Directive, and other planning tools tailored to your family's circumstances.

James R. Elliott Attorney at Law works with individuals and families in Yorktown and throughout Hampton Roads, Virginia to create personalized estate plans designed around their families, assets, and long-term goals.

If you are remarried, have children from a previous relationship, or want greater certainty about how your property will be handled in the future, we can help you understand your options.

Schedule a free consultation to discuss estate planning for your blended family.

This article is provided for general informational purposes only and is not intended as legal advice. Estate planning outcomes depend on the particular facts of each situation and applicable law. Reading this article or contacting the firm does not create an attorney-client relationship.