Step-Parents and Step-Children in Estate Planning

Asset Protection

Estate planning for blended families is critical to ensure that assets are distributed as intended. A spouse’s family members are not included under North Carolina intestacy laws. Without a will, individuals who die in the Tar Heel State may not effectively leave assets to non-blood relatives.

Whether parents want to ensure step-children are included in an estate, or if adult children want to include a step-parent as a beneficiary, an estate planning attorney can craft an estate plan designed to properly implement the testator’s wishes.
One exception to the rule that step-children do not automatically inherit under North Carolina law is when there has been an adoption. For example, if a mother gets divorced and re-marries, her new spouse may want to adopt her child to ensure the child’s inheritance rights. The statutes state:
“From the date of the signing of the [adoption] decree, the adoptee is entitled to inherit real and personal property by, through, and from the adoptive parents in accordance with the statutes on intestate succession and has the same legal status, including all legal rights and obligations of any kind whatsoever, as a child born the legitimate child of the adoptive parents.”

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Also, when an individual adopts a minor stepchild, the legal relationship between the child and the biological parent is terminated, which includes the termination of the child’s rights to inherit from their parent. (§ 48-4-103) At the same time, this removes the biological parents’ rights to inherit from the child under intestacy law.
Another estate planning issue that often arises in blended families is that many parents want to ensure that assets are not diverted to one’s step-children rather than going to one’s biological children. By leaving assets outright to one’s spouse, a testator faces the potential that his or her spouse could leave the inherited assets to the spouse’s own children or new spouse upon his or her death without providing for the testator’s children. It is possible that one’s children could be left out after the second spouse’s death even if the testator leaves instructions for the spouse to provide for his or her children at the second spouse’s death. If the surviving spouse is substantially younger than the first spouse to die, it is also possible that the surviving spouse could deplete the assets during his or her lifetime.
Estate planning tools can help to prevent unintentionally cutting one’s children out of one’s estate. For instance, a couple entering into a blended family arrangement can execute a prenuptial agreement which insulates and protects each spouse’s separate property so that, in the event of divorce or death, each spouse will have greater control over his or her separate property to dispose of as he or she wishes. Additionally, trusts can be designed to provide for the surviving spouse for life, and upon his or her death, the remaining trust assets can be distributed to the testator’s children.
The unintended consequences of the North Carolina intestacy laws as well as accidental disinheritances of children may be avoided with the carefully implemented use of a valid will, trusts, updated beneficiary designations, and other estate planning tools.
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