United States: Estate Planning In The "Modern Family" Era

Originally published in Anderson Kill's Estate Planning & Tax Advisor, Autumn 2015.

The meaning of "family" has undergone some radical changes in recent years, and now encompasses same-sex couples (married to each other or not), blended families, single mothers, and even children conceived and born after the death of their biological father. Other nontraditional family profiles that have developed include multigenerational families (three or more generations); over-40, first-time parents; and "boomerang" families — parents with at least one child aged 21 or over who has returned home to live. As the concept of family evolves, family dynamics evolve in estate planning, too.

Estate Planning Profiles: Traditional vs. Nontraditional

On TV, family sit-coms were introduced to embody the middle-class "traditional family." In the 1950s and 1960s, "Leave it to Beaver" and "Father Knows Best" epitomized the patriarchal, traditional family where both parents were first-time married heterosexuals raising at least one child of their own in their home. The family dynamics within the traditional family were depicted as strong parents guiding their naïve children through any storm with sensitivity and humor.

"Modern Family," which first aired in 2009, thrives today based on the interactions among three families: (1) a blended family, with a husband and wife both in their second marriage with one child, plus children from both prior marriages; (2) same-sex parents with an adopted child; and (3) a traditional family, all connected through one father. The same rivalries and jealousies of traditional families are found within each of the component families.

Trends in Estate Planning

In the past, estate planning sought to strike the appropriate balance between the couple's intention to distribute their estates within the family, and the couple's desire to minimize taxes under federal and state tax laws. Now that the federal estate exemption amount has increased from $600,000 in 1990 to $5,430,000 in 2015, in many estates avoidance of estate taxes is no longer an issue.

The proliferation of nontraditional families, coupled with a dramatically higher federal estate tax exemption, has shifted the estate planning focus in many cases to non-tax issues involving family dynamics. The significant rise in nontraditional families, representing an array of unique new profiles, means that estate planners should be flexible in dealing with the expanded and distinctive nontraditional families' interpersonal issues. Premarital agreements in blended families can go a long way to address the family's dynamics.

Traditional and Nontraditional Families Share Common Estate Planning Issues

"Stuff"

Over the years, traditional and nontraditional families accumulate all kinds of stuff, or tangible personal property, known here as TPP. Some TPP may be quite valuable, or maybe not, but holds sentimental value making it "priceless."

A distribution plan is advised to minimize family conflicts and hurt feelings. Typical approaches include:

  • Direct the personal representative to decide who gets what. This is often done when the personal representative is the surviving spouse or partner, although hard feelings may still result.
  • Allow the beneficiaries to decide. This approach has the disadvantage of encouraging a bully beneficiary to overwhelm meeker beneficiaries.
  • Direct the beneficiaries to "draw straws" to determine an order of distribution among themselves, tracking the value of the distributed TPP to ensure fairness. This approach works well as long as the TPP has been appraised.

Otherwise, the distribution may be uneven resulting in resentful beneficiaries. Some states permit incorporation by reference, so that a separate memorandum, which can be easily changed, governs who receives the TPP. Other states don't recognize the separate memorandum as anything more than a moral obligation.

Clearly there is no perfect distribution plan for TPP. However, with thoughtful pre-planning, harmony among family members may be achieved.

Business Owners

Testamentary dispositions of closely held businesses from traditional or nontraditional families may severely test the family structure. Issues that frequently arise involve (1) the orderly transfer of business management to a child or children, and (2) how shares should be equalized between or among children, particularly when only some children have the aptitude or the interest to be involved in running the business. Transition of the business to the children often challenges the parent-owners because they have a natural reluctance to pass control of the business to their children. To increase the chances of success in business succession, parents are encouraged to discuss their goals with their children to minimize hurt feelings by the non-business-minded children. Succession planning is a transition process, often requiring years to gradually let go of control.

The List Continues: Special Needs Family Members, Fiduciary Selection, Etc.

Children have different strengths and weaknesses. The weaknesses or special needs may include addiction or substance abuse, disabilities, indebtedness or inability to handle money responsibly, marital problems, or a general lack of maturity. Sometimes, it is appropriate for one child's share to be held in trust for him or her, managed and administered by a trustee, while the other children receive their shares outright and free of trust. Although the family dynamic may suffer when children are treated differently, careful planning and explanations may allay some of the resentment.

Similarly, not everyone is a suitable choice to be an executor or trustee. A spouse may be too emotional or grief stricken to handle the hard tasks of a personal representative. A child may have the financial expertise to make investments, but lack the empathy to be a trustee, and so perhaps should serve with a co-trustee having those other qualities.

Based on demographic statistics reported for over 50 years, the nontraditional family with evolving family dynamics is here to stay, diversify and flourish. That said, the estate planning professional must go beyond minimizing taxes, and must also seek creative ways to promote family harmony within the family's dynamics.


Carole B. Sheffield is a shareholder in the Philadelphia office of Anderson Kill. Ms. Sheffield handles complex matters of federal and state tax preparation of estate, gift, fiduciary income and personal income tax returns for trusts and estates. She has extensive experience in probate and orphans' court, where she has litigated and mediated for trusts and estates with regard to noncontested and contested matters for individuals and corporate trustees.


About Anderson Kill

Anderson Kill practices law in the areas of Insurance Recovery, Commercial Litigation, Environmental Law, Estate, Trusts and Tax Services, Corporate and Securities, Antitrust, Banking and Lending, Bankruptcy and Restructuring, Real Estate and Construction, Foreign Investment Recovery, Public Law, Government Affairs, Employment and Labor Law, Captive Insurance, Intellectual Property, Corporate Tax, Hospitality, and Health Reform. Recognized nationwide by Chambers USA for Client Service and Commercial Awareness, and best-known for its work in insurance recovery, the firm represents policyholders only in insurance coverage disputes - with no ties to insurance companies and has no conflicts of interest. Clients include Fortune 1000 companies, small and medium-sized businesses, governmental entities, and nonprofits as well as personal estates. Based in New York City, the firm also has offices in Ventura, CA, Philadelphia, PA, Stamford, CT, Washington, DC, Newark, NJ and Dallas, TX.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.