Individuals with blended families often face different estate planning challenges than other families, particularly if there are children and stepchildren involved. If this is the case for you, you may want your stepchildren to receive an inheritance when you die. So, what are the inheritance rights of stepchildren? Actually, they have none. If you were to pass away without an estate plan, the state would divide your assets between either your spouse and biological children, or your closest living relatives. Stepchildren do not have inheritance rights unless you have legally adopted them.
If you want your stepchildren to inherit from you, you must specifically name them as beneficiaries using at least one estate planning tool, such as a will, trust, or beneficiary designation.
[Related: What Happens If I Die Without A Will?]
Questions to Ask about Your Blended Family
In some blended families, the topic of who receives what inheritance can be complicated. This means that creating a thorough estate plan is important, as is avoiding family conflict and communicating your love and care to each of the people you hold dear, be they biological children or stepchildren. Every family is different. Some people give their stepchildren equal shares in the inheritance, and others don’t.
We work with blended families often and talk to each of our clients about their interpersonal relationships to help guide them toward the right course of action for their family.
To help decide if and how your stepchildren will inherit from you, consider the following questions:
- What kind of relationship do you have with your stepchildren?
- Do you have financial or emotional concerns about your stepchildren?
- Does it seem natural to give your stepchildren an equal share to your biological children, or is there an obvious difference in your relationships with each?
- What are the pros and cons of including your stepchildren in your estate plan?
- If applicable, is your spouse providing for their biological children only, or for your children as well?
If you’ve considered your family dynamics and decided that it is best to make your stepchildren a part of your estate plan, there are several ways to leave them an inheritance.
How to Include Your Stepchildren in Your Estate Plan
As mentioned before, you can use various estate planning tools to ensure your stepchildren will inherit from you. Here are three of the most common tools used to do so:
- A last will and testament: Name your stepchildren as beneficiaries of your will. You can designate a set amount for them or instruct that they receive a percentage of whatever your estate is worth at the time of your death.
- A trust: Create a trust and make your stepchildren beneficiaries. You can even create a special needs trust or minor’s trust for stepchildren with mental or physical challenges or who are underage.
[Related: Do I Need a Trust?] - A beneficiary designation: You can pass on certain money accounts, such as life insurance and retirement funds, with beneficiary designations rather than with a will or trust. Gift funds to your stepchildren by designating them as beneficiaries on these kinds of accounts.
(Related: What is a Beneficiary Designation?)
Whether you have been in your stepchildren’s lives since they were young, or you are just forming a relationship with them now, you will have to consider if you want them to inherit from you, and if so, how. If you decide you want them to be your heirs, it is more important than ever to create an estate plan, so that you can get around the fact that stepchildren do not have inheritance rights.
Let us help you consider the options in more detail so that you can make the right choice for your family. Schedule an appointment today!
