The Brady Bunch films of a few years back rekindled interest in North America’s most famous “blended” family.  But while the Brady family was able to resolve even the most difficult issues in just ninety minutes or so – and before that, within each ‘70’s-era 30-minute TV episode – “real life” blended families face longer-lasting challenges.  And there are a lot of blended families out there.  In fact, according to the 2001 General Social Survey, there are over half a million “step” families in Canada – that is, families created by the marriage or common-law relationship of partners with children from a previous relationship, a figure that continues to rise.

Money issues can challenge any relationship – and they can cause additional stresses on a newly blended family, especially when each partner brings different ways of handling finances into the new union.  Add in the estate planning complexities faced by blended families and it’s easy to see that finding the right financial formula is critical to the long-term emotional and financial health of the new relationship.  Here are some tips for finding the formula that works best for you:

Purge, merge and budget       Often, money-handling differences don’t come to light until after the “blending” has occurred.  When they do, deal with them right away.   Be forthright in disclosing the assets and income each partner brings to the new union.  Seek agreement on short- and long-term financial goals aimed at attaining the new family’s objectives.  Review each partner’s income and expenses and create a budget that includes a spending plan for day-to-day living costs and who should be responsible for them.  Be sure to include all “hold-over” obligations such as child support payments or alimony. 

Don’t kid around        When it comes to kids and money, parents can bring very different ideas to the newly blended family.  One parent may set strict allowances in exchange for specific tasks; the other may be more informal, giving out money as a child asks for it.  To avoid jealousy and ensure equal treatment, the new partners should seek agreement on how money will be provided to all children on a day-to-day basis.

It is also important to discuss approaches for saving for the children’s education.  One spouse may have invested in a Registered Education Savings Plan (RESP) for years while the other didn’t, for one reason or another.  If there is a disparity, find ways of bridging it so each partner’s children will enjoy equal opportunity down the road.

(E)state your wishes clearly              It’s important that you redo your will and estate plan as soon as possible after “blending”.  In every province except Quebec, getting married usually renders all previous wills void. And a will with standardized terms is not recommended for a blended family because the first spouse to die would generally leave everything to their surviving spouse.  The surviving spouse could then choose to leave the entire estate only to his or her children or, in the event that spouse did not have a will, the estate could be distributed among his or her biological children only – not to any stepchildren.  It is also possible that the surviving spouse could remarry, potentially disinheriting the children of the deceased spouse and even the children of the surviving spouse, if the new spouse becomes entitled to all or a large portion of the estate (depending on the province of residence).

There are solutions to these estate planning complexities – and to the many other financial issues faced by blended families.  A financial advisor can help you develop the right financial strategies for your “blended” situation that will help ensure your financial goals are met without heartache and in a tax efficient way.