MSU Extension releases new MontGuide on helping blended families develop estate plans

MSU News Service

BOZEMAN — When it comes to estate planning, blended families can face unique challenges. One of these challenges is rooted in Montana laws governing who inherits property when a deceased family member did not have a written will or another document listing beneficiaries.

While these laws often work smoothly with the estate planning goals of a traditional family, Montana State University Extension experts said the laws are less likely to address the complex issues of blended families. To help inform the public, MSU Extension has created a new MontGuide addressing the estate planning process for blended families.

“In this MontGuide we focus on a blended family in Montana who does not have an estate plan,” said Marsha Goetting, MSU Extension family economics specialist.  “We explore what Montana law will do with their property, then we provide three options and outline some of the advantages and disadvantages.”

In the MontGuide example, a family learns of two key things that could affect their children’s inheritances. The first is the realization that the parents, by having property in joint tenancy with right of survivorship, could end up disinheriting their own biological children because the property would pass to the surviving joint tenant, in this case to the other parent, not to their respective biological children. The second is learning that a will, while easy to implement, may not meet the parents’ goal of providing an equitable inheritance for their respective children.

However, Joel Schumacher, MSU Extension economics associate specialist, said a will with a testamentary trust can help blended families create an estate plan to meet goals of passing specific property to specific heirs.

“The property in the testamentary trust can provide income for the surviving spouse during their lifetime,” Schumacher said, “and after the death of the surviving spouse, allow the remaining testamentary trust property to pass to the desired heirs.”

The MontGuide also touches on Clayton Election Qualified Terminable Interest Property – or QTIP – trusts, another estate planning tool. While this option is the most complex of the three, Goetting and Schumacher said the trust is helpful to beneficiaries as it enables them to avoid capital gains taxes if they sell the inherited property.

“ A QTIP trust also has added flexibility in anticipation of future federal estate tax law changes,” Goetting said.

Goetting and Schumacher urge individuals to contact an estate planning attorney if they would like to explore the legal ramifications of a will or Clayton Election QTIP trusts. The MontGuide can be downloaded at https://store.msuextension.org/Products/Using-Trusts-in-an-Estate-Plan-to-Provide-for-Children-from-Blended-Families-MT202109HR__MT202109HR.aspx. Paper copies are also available at local county and reservation offices.