Louisiana Blended Family Estate Planning

From an estate planning perspective, spouses who have children from a prior marriage or relationship can be a ticking time bomb waiting to explode.

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Here's the problem: Husband and Wife (let's call them Henry and Wendy) each have two children from prior marriage. Henry thinks he's doing the "right thing" by designating Wendy as the primary beneficiary, and Henry's two adult children as the contingent beneficiary, on all of Henry's IRAs, retirement accounts, life insurance policies, and annuities. He thinks he's "protecting" his kids by naming them as contingent beneficiaries.

Henry also thinks he's got his estate planning under control because his last will and testament leaves the form of ownership called "usufruct" to his wife, and Henry names his two children as the naked owners.

Henry later dies. About two weeks after Henry dies, Wendy gets the death certificates and immediately applies for, and receives, all of the IRAs, retirement accounts, life insurance, and annuities. These assets are hers to do with what she wishes. The fact that Henry's kids were the contingent beneficiaries means NOTHING at this point.

Next, Wendy and Henry's children each get their own lawyers and bicker their way through the Succession. Upon the Succession's completion, Wendy is able to put all of Henry's money in her name.

A few years later, Wendy dies. She, of course, had named HER TWO CHILDREN as the beneficiaries of her IRAs, including the accounts she received from Henry. And, what do you know, Wendy had spent all of the money over which she had usufruct, so there are no assets in the "Succession of Wendy" from which Henry's kids can exercise their naked ownership rights. Wendy's children wind up with everything. Henry's children wind up with nothing but a big lawyer bill and a bitter taste in their mouth about their father and step-mother.

The traditional legal plan that many married couples put in place simply does not work for blended families.

The solution is to have a creative, proactive, well-communicated and thought-through, customized blended family estate planning program, often with an emphasis on structuring your retirement accounts and other estate assets in a manner so they can be available for certain needs of your 2nd spouse, but your children's inheritance is protected from being squandered away or left to people other than your children.

So, what do you do? Educate yourself. Heck, I've written books and blog posts, and I've made numerous videos which address this situation.

Then, when you are ready to talk to an estate planning attorney who can guide you through this in an easy manner, click the button or link to go straight to my work calendar to schedule a free 15 minute call to start a conversation about what you are trying to accomplish for your family, and the simplest way to accomplish it.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450