It's hard to imagine Mike Brady of the popular '70s sitcom The Brady Bunch leaving nothing to stepchildren Marcia, Jan, and Cindy. We'd probably be shocked if Mike's second wife, Carol, ignored stepchildren Greg, Peter, and Bobby in her estate planning, too.
After all, the Brady Bunch was the perfect blended family—all for one and one for all, right? Unfortunately, sometimes things go awry.
Imagine this scenario—Mike dies and leaves everything to Carol, and his sons don't call or visit their stepmother. Confused, hurt, or even angry—and perhaps encouraged by her daughters—Carol changes her will to exclude Mike's kids. Or, just as possible, imagine that Carol dies without a will. In that situation, the law leaves everything without a designated beneficiary to her biological and adopted children, not to her stepchildren.
"There's a little-known pitfall with estate planning in second and successive marriages. I call it 'winner's children take all,'" estate planning attorney Cheryl David says.
To prevent your stepchildren from being excluded, Jodi Zimmerman and Robert Birnbaum, estate planning attorneys at Sichenzia Ross Ference LLP, recommend being very precise in your will. Specifically, instead of writing "to my children," use your stepchildren's full names.
In addition, make sure your lawyer knows they're stepchildren—not blood descendants or adopted—and identify what you want each stepchild to receive, whether it's a dollar amount, real estate, or grandpa's rocking chair.
"When we prepare a will, we delve into this, asking the client to identify the next of kin the client wants to benefit. We can't accept 'my wife and children.' We need full names and relationships," Zimmerman says.
Consider a Trust
When the situation warrants it, the parent can also write a testamentary trust into the will. This is typically included when a beneficiary has disabilities or other challenges, or the children involved are young.
In cases where there's wealth, a spouse can also set up a trust with funds that are invested to generate interest income. That income might be paid to the surviving spouse, with the principal to be divided among named survivors upon that spouse's death.
"When it's my money in my will, I can control its disposition. If I leave it outright to my spouse, I've lost control of it. A trust lets me control it after my lifetime," Birnbaum says.
Name an Account Beneficiary
Another option is to name stepchildren as beneficiaries of financial assets such as life insurance, IRAs, and investment accounts.
An advantage to that, regardless of who is named as beneficiary, is that the money becomes available more quickly than assets in a will that needs to go through probate.
How Much to Communicate
One of the challenges associated with including stepchildren in estate planning is that the decision can be an emotional one for everyone involved. Does it make sense to talk about it with beneficiaries when doing your estate planning?
That depends on the situation.
"We like to give as much peace to our clients as possible," Zimmerman says. "Part of what we do is figure out how to proceed with delicacy while striking a balance between emotions and estate planning goals."
To make sure your wishes are executed properly when including stepchildren in your estate planning, consult an attorney with relevant expertise. Proper guidance now can save your heirs heartache later.
It's probably what Mike and Carol Brady would have done.