Love, Marriage and Oklahoma Estate Planning: A Blended Family’s Guide to Fair Inheritance

My spouse passed away several years ago and I’m about to marry for the second time. Both of us have our own assets and our own kids. Both sets of kids want to make sure they are not disinherited. How can we arrange our assets to make sure each of our kids receive an equitable amount?

I’m sorry for your loss and congratulations on your upcoming marriage. Ensuring that both sets of children are treated equitably in terms of inheritance is a common concern in blended families. Here are some strategies you can consider: ### 1. **Prenuptial Agreement** A prenuptial agreement can outline how assets will be divided in the event of a divorce or death. This can help ensure that each set of children receives their fair share. ### 2. **Separate Property** Keep certain assets as separate property rather than commingling them. This can be done by maintaining separate bank accounts and investments. ### 3. **Trusts** Trusts can be an effective way to manage and distribute assets according to your wishes. Here are a few types of trusts to consider: - **Revocable Living Trust:** Allows you to retain control over the assets during your lifetime and specify how they should be distributed after your death. - **Irrevocable Trust:** Once assets are placed in this trust, you cannot change the terms. This can provide tax benefits and protect assets from creditors. - **Qualified Terminable Interest Property (QTIP) Trust:** Provides income to the surviving spouse for life, with the remaining assets going to the children from the first marriage after the spouse’s death. ### 4. **Life Insurance** Life insurance policies can be used to provide for children from a previous marriage. The death benefit can be directed to them, ensuring they receive an inheritance. ### 5. **Beneficiary Designations** Ensure that beneficiary designations on retirement accounts, life insurance policies, and other financial accounts are up-to-date and reflect your wishes. ### 6. **Wills** A well-drafted will can specify how you want your assets to be distributed. Make sure to update your will to reflect your new marriage and any changes in your wishes. ### 7. **Joint Ownership with Rights of Survivorship** Be cautious with joint ownership, as it can override the terms of a will. Jointly owned property typically passes directly to the surviving owner. ### 8. **Consult a Financial Planner and Estate Attorney** Given the complexity of blended family finances, it’s wise to consult with a financial planner and an estate attorney. They can help you create a comprehensive plan that addresses your specific needs and goals. ### Example Scenario Let’s say you have $500,000 in assets and your future spouse has $400,000. You both want to ensure that your respective children receive these amounts. Here’s a possible approach: - **Prenuptial Agreement:** Specify that each set of children will inherit their parent’s assets. - **Separate Property:** Keep your $500,000 and your spouse’s $400,000 in separate accounts. - **Trusts:** Set up a revocable living trust for each of you, naming your respective children as beneficiaries. - **Life Insurance:** Purchase life insurance policies with your children as beneficiaries to provide additional security. Would you like more detailed information on any of these strategies, or do you have specific assets or concerns you’d like to address?

We will live in Oklahoma, how would that impact our situation?

Living in Oklahoma can have specific implications for your estate planning and asset management, especially in the context of a blended family. Here are some key considerations: ### 1. **Community Property vs. Common Law State** Oklahoma is a common law state, not a community property state. This means that assets acquired during the marriage are not automatically considered jointly owned. Instead, each spouse retains ownership of assets acquired individually, unless they choose to co-mingle them. ### 2. **Spousal Elective Share** Oklahoma law provides for a spousal elective share, which means that a surviving spouse is entitled to a portion of the deceased spouse’s estate, regardless of what the will states. The elective share is typically one-third of the estate. This could impact how much is available to bequeath to your children. ### 3. **Homestead Rights** Oklahoma has homestead laws that protect a surviving spouse’s right to live in the family home. This could affect the distribution of real estate assets. ### 4. **Trusts and Wills** - **Revocable Living Trusts:** These can help avoid probate and ensure that your assets are distributed according to your wishes. In Oklahoma, trusts are a common tool for estate planning. - **Wills:** Make sure your will is updated and complies with Oklahoma law. This includes having it properly witnessed and notarized. ### 5. **Probate Process** Oklahoma has a probate process that can be time-consuming and costly. Using trusts and other estate planning tools can help minimize the assets that go through probate. ### 6. **Beneficiary Designations** Ensure that all beneficiary designations on retirement accounts, life insurance policies, and other financial accounts are up-to-date and reflect your wishes. These designations can override the terms of a will. ### 7. **Legal and Financial Advice** Given the complexities of estate planning in a blended family, it’s crucial to consult with an estate attorney and a financial planner who are familiar with Oklahoma law. They can help you navigate the specific legal requirements and ensure that your estate plan is robust and equitable. ### Example Scenario Adjusted for Oklahoma Let’s revisit the example where you have $500,000 in assets and your future spouse has $400,000. Here’s how you might adjust your approach: - **Prenuptial Agreement:** Clearly outline the division of assets and ensure it complies with Oklahoma law. - **Separate Property:** Maintain separate accounts for your $500,000 and your spouse’s $400,000. - **Trusts:** Set up revocable living trusts for each of you, naming your respective children as beneficiaries. This can help avoid probate and ensure your wishes are followed. - **Life Insurance:** Purchase life insurance policies with your children as beneficiaries to provide additional security. - **Homestead Rights:** Consider how the homestead laws might impact the family home and plan accordingly. ### Next Steps 1. **Consult an Estate Attorney:** Find an attorney in Oklahoma who specializes in estate planning and can help draft the necessary documents. 2. **Update Beneficiary Designations:** Ensure all financial accounts and insurance policies have the correct beneficiaries listed. 3. **Review and Update Regularly:** Regularly review and update your estate plan to reflect any changes in your circumstances or the law. Would you like more detailed information on any of these strategies, or do you have specific assets or concerns you’d like to address?