Spouses, Children, and Blended Families
What is a “blended family?”
A blended family consists of a marriage between spouses who had children from a previous relationship. This family situation is important to understand within an estate planning context because spouses and children in blended families enjoy unique inheritance, property, and homestead rights in certain scenarios.
Under Texas Law, if you (1) have a blended family, (2) have children from a previous marriage, and (3) die without a Will (or with an invalid Will), then your children have a right to inherit your one-half share of your marriage’s community property. Further, your children have a right to inherit two-thirds of your separate property. Your surviving spouse has a right to keep only his or her one-half share of your marriage’s total community property, and has no right to your one-half share thereof. Further, your surviving spouse also has a right to a life estate in one-third of your separate property.
It becomes more complicated when it comes to real estate.
If you and your spouse both owned a home as community property, which you designated as your homestead, then your spouse will continue to enjoy homestead rights such as continuing occupation in your one-half share of that homestead. If your separate property included real property, your spouse will enjoy a special lifetime right in one-third of that separate real property, which is called a “life estate.” In some cases, where the separate property was also the marital home, the surviving spouse will enjoy a probate homestead right in that separate property (which is similar to a life estate, and which is often referred to as such). If that separate property was a ranch, hotel, or apartment building, the surviving spouse would receive life estate rights in one-third of that property, while your children would receive the remaining two-thirds of that property outright. After your spouse passes away (and the one-third life estate expires), your children would then receive the remaining one-third outright.
Note that this article only generally explores some important estate planning considerations when it comes to blended families. It does not explore the intricate distinctions between the rights and duties involved in a homestead and a life estate. Suffice it to say that those categories differ when it comes to maintenance, occupation, mortgages, leases, profits, taxes, and the rights and duties of your surviving children who will receive the property after your spouse passes away.
Again, it is important to emphasize that the above scenarios occur only when you pass away without a Will (or with an invalid Will). If you pass away and do leave a valid Will, then your property will pass as you have dictated therein, subject to a few important exceptions. For example, by law, your spouse enjoys several automatic marital protections. The major protection is that you cannot block your surviving spouse’s potential homestead rights. This means that your surviving spouse may continue to live in your homestead, even if you devised your community property share thereof to another party.
In addition to the security of your spouse’s homestead rights, your spouse is also entitled to “reimbursement” in some cases. A spousal reimbursement right typically arises when one spouse owned separate property prior to marriage and, during the marriage, both spouses financially contributed to that property. For example, if you bought a home prior to marriage, and then both you and your newly-married spouse made continuous mortgage payments and paid for re-modeling during your marriage, your spouse technically might still not have ownership rights in that property. It was your separate property prior to marriage, and will remain your separate property (unless you made a pre-nuptial or marital agreement, or a gift of that property to your spouse). Therefore, in order to protect your spouse’s investment, the law provides a right to reimbursement to your spouse for financial contributions made to your separate property. Your spouse can enforce this right by claiming it during a divorce, or during probate after you have passed away.
As you can see, being in a blended family can give rise to unique legal issues that need to be addressed. One of the best ways to address such issues is to prepare an estate plan. Doing so can avoid confusion, disputes, expenses, and heartache.