How Can Stepdaughter be Reassured in Estate Plan for Blended Family?

Question:

My husband of over 40 years recently was diagnosed with Parkinson’s and dementia and is no longer able to act as a co-trustee with me on our trust.  His daughter, who is my stepdaughter, now wants to step in as co-trustee with me.  I told her no, and that I would act as sole trustee. The beneficiaries in our trust are two people, her and my one son.

Needless to say, this has caused some friction within our blended family.  She and I have always had a good relationship. Any suggestions?

Response:

Blended families often create estate planning challenges. In some cases it’s because the couple doesn’t do proper planning and there’s a chance all asset will end up with the surviving partner or spouse and pass to his or her side of the family. But even where the parents have put a plan in place to treat all children equally, as you have done, tensions can arise when one partner is likely to outlive the other for a long period of time. On the one hand, the child or children of the deceased partner may resent waiting for their inheritance or fear either that the surviving partner will change the plan or the funds will be spent down, which could happen in a number of ways: simple living expenses, long-term care costs, the surviving spouse meeting a new partner or becoming subject to undue influence or fraud. On the other hand, the surviving partner generally does not want her life controlled by the deceased partner’s children.

This conflict is playing out in your family. Your stepdaughter has a clear interest both in making sure that her father is well cared for and that she ultimately receives her inheritance. You have a clear interest in your own autonomy and being able to live your life without anyone looking over your shoulder. I think a solution could be to find a way to reassure your stepdaughter through extreme transparency. Don’t name her as co-trustee, but give her access to see the trust accounts on-line. Also, name her as co-successor trustee along with your son in the event you become incapacitated. These steps mean you’re both getting something and giving up something. Your stepdaughter gets to see what’s going on, but doesn’t have control. You maintain control, but lose some privacy.

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