A man and a woman married, each for the second time. Eventually they had his, hers and ours children and property. She had some securities and a wedding ring her mother had given her to enjoy and then give to her oldest daughter. He had contributed his residence from his first marriage to the second marriage. His father had also given him a family farm, and told him when he died, he was to give the farm to his younger brother.        

Husband and wife each have "I Love You" wills - all to my spouse, or if my spouse does not survive me, all to my children in equal shares. This type of will is a disaster in a second marriage situation. Who will get their property?        

Wife dies first. All her property goes by her will to her husband. He marries a third wife, who has the same kind of will. The husband dies. All his property goes by his will to the third wife. Then the third wife dies without remarrying. Her will gives everything to her children. None of the property goes to the children of the second wife. The oldest daughter does not get the wedding ring from her grandmother and mother. None of the property goes to the children of the husband. The younger brother does not get the family farm. All of the second wife's property goes to the children of the third wife. The "his, hers and ours children" of he second marriage get nothing.        

Blended Family Trust

What can the estate planning attorney do to solve this problem? I developed a blended family trust, which is three trusts in one trust agreement, his, hers and ours trusts. There is a normal revocable trust, which is the family trust to hold the family property of the new second marriage. Husband and wife are co-trustees of this family trust. When one dies, the other is sole trustee, and can change the trust in any manner. When both die, or become incapacitated, a child or a bank becomes the successor trustee. The husband would transfer his residence to this family trust. The wife would transfer some of her securities to this family trust as her contribution to the family of the new second marriage. The revocable family trust provides for husband and wife, then for the survivor, and then to all the children (his, hers and ours) equally.        

The other two trusts provide for the one who set it up. Then there is a balance between providing for the surviving spouse and for the children of the first marriage.        

The wife transfers the rest of her securities and the wedding ring her mother gave her to the "hers" trust, an irrevocable trust where she is the sole trustee, and her sister is the successor trustee. When the wife dies, the wedding ring is to be given to her daughter, and the securities are to be invested with the income paid to her husband during his lifetime. Upon his death, the trust assets are distributed to her children (hers and ours) in equal shares.        

The husband transfers the family farm to the "his" trust, an irrevocable trust with the husband as trustee and his brother as successor trustee. Upon his death, if his wife survives him, the farm is held for her benefit. She gets the income from the farm. Upon her death, the farm is distributed to the younger brother. Other property in this "his" trust is distributed to his children (his and ours).        

If the wife dies first, the husband remarries, then dies, and the third wife then dies, the assets of the "hers" trust go to the second wife's children. The assets of the "his" trust go to the second husband's children. The assets of the family trust go to all the children (his, hers and ours), unless it has been amended during the third marriage.        

A Blended Family Trust After The Second Marriage

A blended family trust is a very effective estate planning method when it is created after a the second ( or third) marriage. The assets are known and often the children are known. It is a matter of sorting the assets into three groups, his hers and ours, and transferring the assets into the right trust. The different trusts can be designed to do what each family needs. The example above is only a typical example of how the three trusts can be designed. This is where discussion with the lawyer is very important. It is an interactive process between the lawyer and the client to design each trust just the way the clients want.        

A Blended Family Trust Before The Second Marriage

In addition to all the benefits of a blended family trust after the second (or third ) marriage, if the trust instrument is signed before the marriage, two additional benefits can be obtained. The trust can be a positive, pro-second marriage, prenuptial agreement. The two additional benefits are that an agreement can be made before marriage that the property in the "his" trust or "hers" trust will be considered to remain separate property of the respective spouse even if (1) marital assets are used to pay off debt on these separate assets, or (2) there is any increase in value of these separate assets during the second marriage. This agreement can be made after the second marriage, when the assets are put into the respective trusts of the blended family trust, but they are legally more secure in case of divorce, or death if the agreement is signed before the marriage. If title to an asset always remained in one spouse's name or in a "his" trust or "her" trust, there can be no question of whether it was given to the other spouse (for example, put in joint tenancy) and was therefore changed to a marital asset. Keeping this separate property in these separate trusts makes it clear, no gift was intended.        

If you have read this far, you need to come in and talk to me about your blended family. Each family is different. A blended family trust can be designed to meet the special needs of your blended family. Don't let these fears fester. Come in and get your solutions now.        

Call me at (405) 842-7590 or click here to E-mail me. If you aren't married yet, but are thinking about it, call me, the initial consultation is free.