Yours, mine and ours: An estate planner's nightmare

Every day, we hear about the many challenges of an aging population. With advancing age comes those hard-to-discuss end-of-life planning issues, something with which financial advisers are all too familiar. And we know most advisers want to help.

However, there is one factor that is often overlooked in these discussions: blended families.

According to a 2011 Pew Research Center study, 42% of American adults have a step relationship — a stepparent, a step- or half-sibling, or a stepchild. In many cases, these familial relationships have been in place for decades and can bring an added layer of complexity when it comes to estate and end-of-life asset planning.


As you can imagine, with many stepfamilies there is a very large elephant in the room when it comes to discussing money and the distribution of personal property after the death of a stepparent — especially when a family has the trifecta combination of “yours,” “mine” and “ours.” Possessions — sentimental and valuable — also are subject to these complicating factors.

For the adviser, making a strategic investment plan for your clients' financial future is complicated enough. When you add the emotional complexities of blended families, the task becomes that much more delicate. Decisions involving money — or possessions — can be emotional minefields charged with sentiment, entitlement and possibly the animus of various relationships.

All advisers recognize the importance of having a sound financial plan and deep relationship to meet the needs of both parents. Financial planning software, available at most financial service firms, combined with the clients' other advisers (e.g., attorneys and accountants) can handle the family's financial assets. However, as we have seen recently with the heirs to celebrities such as Robin Williams and Audrey Hepburn, it's the “things” or “stuff” issues that unravel even the most well-thought-out estate plan and force the families into court. Attorneys do documents, but who does the “wishes”?


You can help avoid conflict, cost and confusion by making sure the planning is not merely limited to putting the portfolio and future cash flows together. An adviser also has the opportunity to bring added value to the client relationship by sensitively surfacing many of the complicating issues that any family faces. After all, an adviser is uniquely positioned to understand the family dynamics in play. You know — or may have personal relationships with — all of the family members involved.

Desktop financial planning software doesn't lend itself to figuring out who gets great-grandma's wedding ring, the cabinet that made its way across the ocean with a great-great-uncle, or the family china. Moreover, it doesn't cover issues associated with passwords on social media accounts, who gets what family photos, or even who is slated to speak at the funeral.

So, how does an adviser best facilitate the challenges posed in planning for blended families and the wave of emotions that arise when bringing up the sensitive and sometimes combustible subjects of money and death?

There are resources that can help your clients pull this information together, have it in writing, and allow for updates. Helping your blended or even traditional families address these sensitivities before they become landmines can be a great relationship-strengthening opportunity for the family and the adviser. Think of the conversations that can come out of this process. The expense to your client is minimal when you use existing resources to help with this process.

Frankly, with a blended family — as with all types of families — if you are the catalyst that helps capture the right information that ensures a clear, efficient and amicable transition of financial assets and the sentimental “stuff,” it won't just be your clients who are grateful — it will be their children — “his,” “hers,” and “theirs.”

This Article was originally posted in Investment News on June 21, 2015.