It’s sometimes surprising to see just how many people never bother to engage in any sort of serious estate planning. All too often, people either put off their planning until it’s too late or simply assume that they don’t have enough assets to worry about creating a plan. That can be a real problem for heirs, however, since the failure to execute a will or other estate planning option can leave your estate subject to Michigan’s intestate laws. That means that your asset distribution is determined solely by the state’s laws governing intestate succession, rather than in accordance with your actual wishes. For blended families, that can be disastrous.
Intestate Laws in Michigan
Michigan’s intestate succession laws provide strict rules that govern who gets your assets when you die without a will. It’s important to remember, however, that these rules only apply to those assets that would have been subject to the provisions in a Last Will and Testament, and do not apply to property that is distributed using other estate planning techniques and tools. For example, if you have a living trust, then any assets owned by the trust will be distributed to beneficiaries as directed by the trust’s terms. The same process holds true for life insurance proceeds, retirement account beneficiary designations, payable-on-death accounts, and assets you own using joint tenancy.
However, assets that you own in your sole name without any other means for automatic transfer of ownership would typically be subject to probate. Without a will, that means that those probate assets become subject to the intestate laws, and are distributed according to those provisions in state law. Those determinations are based on a variety of factors having to do with the types of potential heirs you leave behind. This system can create some odd results that most people would find somewhat surprising.
For example, if you die without children, but still have parents who are living, your spouse won’t receive your entire estate. Instead, he or she will get the first $222,000 (2016) and then three-quarters of the remaining estate. The rest will be distributed to your surviving parents. If you are married with children from that marriage, your spouse receives that same $222,000 (2016) plus half of the remaining estate. Your children will receive equal shares of the remaining estate balance.
There are many other examples, but the bottom line is easy to understand: without a will, you have no control over who gets what. Now, with a traditional first-marriage family structure, that might not seem like a major issue – though even then the inheritance split may not be to your liking. With a blended family, however, things can get extremely complicated and some descendants can actually end up receiving nothing.
The Blended Family
According to the most commonly used definition, a blended family is any family unit that is made up of previously-married parents and their children from prior marriages. In past generations, we used to refer to these families as step-families, but the term blended family gained preference as their numbers grew. Today, most experts recognize that there are more blended families in the United States than so-called nuclear families, and that trend is accelerating. By some estimates, as many as half of all Americans born in the last half-century could end up being part of a blended family during their lives.
On the surface, that’s a seemingly insignificant issue. After all, these families are formed by loving individuals who come together to create something new and wonderful. When it comes to inheritance concerns, however, these families can represent unique challenges that parents often fail to consider. For those who use estate planning to address their inheritance needs, these issues are simple to resolve. A Last Will and Testament, trust, or other planning tool can quickly dispense with any questions about who gets what when you die. Without estate planning, however, those questions invariably lead to post-death confusion, disappointment, and emotional anguish.
The Blended Family and Intestate Laws
Under the state’s intestate laws, your children are entitled to estate shares based on several factors that include your marital status, whether the state recognizes them as your legal children, and their legal relationship to you. You might think that your blended family automatically ensures that your spouse’s children are entitled to their fair share of your estate, but that may not actually be true. Consider this:
- If you have adopted children, those heirs are entitled to a share of your estate.
- If you have children with your spouse, those children are presumed to be yours and are thus entitled to a legal share of the estate.
- If you have a child outside of your marriage but have acknowledged that child as yours, he or she will be entitled to a share as well.
However, if you are in a blended marriage and have not legally adopted your spouse’s children, the intestate laws do not guarantee those children a share of your wealth when you die! That’s a situation that no loving parent wants to be responsible for creating. The problem is that the expense involved in adopting step-children has resulted in many blended families in which the parents never formally adopt one another’s children. Unfortunately, those children may not be entitled to their rightful family inheritance without adequate estate planning to secure their rights.
What Can You Do?
Inheritance rights for the children of blended families are but one of many concerns that need to be addressed when those families are formed. Many times, those parents also neglect to update beneficiary designations, fail to title property correctly, and ignore other important estate planning concerns that could prevent future problems. At Biddinger, Bitzer & Estelle, PLLC, our estate planning experts can help you to navigate these complex issues to ensure that your blended family never ends up dealing with the complications that the intestate laws can often create. If you’d like to learn more about how we can help you to protect your spouse and children with comprehensive estate planning that works, contact us at our website or call us today at (989) 872-5601.