When the parents die, blended families can also be prone to fierce fights over money, especially if stepdad or stepmom was loaded.
The American family has gotten pretty complicated. Two in five marriages are remarriages, according to the Pew Research Center, and since 1980 the number of people who have been married more than once has nearly doubled. That means we have many more stepparents, half-siblings and step-nieces than ever before.
Many of these big families are happy ones. But when the parents die, blended families can also be prone to fierce fights over money, especially if Stepdad or Stepmom was loaded.
This doesn’t prevent traditional families from fighting like cats and dogs. Still, split one fortune between three siblings and the math is relatively easy: Divide by three. It’s a lot harder to divide up multiple pools of money — with each parent having assets he or she collected before the marriage — between a gaggle of kids and stepkids whose ages sometimes span a generation.
A new survey by UBS Wealth Management shows just how challenging estate planning can be for wealthy blended families. UBS surveyed 2,715 affluent Americans, two-thirds of whom had at least $1 million to invest. Almost a third of blended families say there are conflicts among potential heirs, compared to 12 percent for traditional families.
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The classic advice for families heading for inheritance battles is to talk it out. If everyone knows how much money is at stake and how it’s being split up, they’re less likely to be surprised or offended when the will is read. But while two-thirds of wealthy traditional families have had those discussions, the survey shows that only half of wealthy blended families have. Adding to the tension, 63 percent of respondents say their spouse’s children don’t completely accept them.
No matter how much money is at stake, regular family meetings can help tie together large, sprawling families, said Linda Davis Taylor, the author of a new book on estate planning, “The Business of Family: How to Stay Rich for Generations.” Certainly the very wealthy can afford to throw money at the problem. Many wealth management firms have started setting up elaborate retreats for the families of their high-income clients; distant stepsiblings and half-cousins get both financial education and bonding time while hanging out at lavish resorts.
A more modest solution to knitting together a diverse family is shared philanthropy. Taylor’s own family meets up every year in the tiny rural Louisiana town where the family supports a local school. While no family members live there, it’s where her late parents founded the family business, a small oil company. Without that annual trip, “it would have been easy to feel isolated and disconnected,” said Taylor, who heads up Clifford Swan Investment Counsel in Pasadena, Calif. Instead, she said, the school project is “our common bond.”