If you have a blended family, your property may be distributed in ways that you do not intend. To show what happens, let’s assume Mommy Shark and Daddy Shark have one baby shark together. Daddy Shark had one baby shark from a previous marriage.
When Daddy dies, he leaves behind the following assets:
- A home that Mommy and Daddy bought together after they got married and still live in it.
- A flower shop with commercial property acquired during their marriage.
- A lake house which Daddy owned before he met mommy.
- A bank account worth $200,000 to which both contributed for their retirement.
The home in which they lived is community property. But because daddy has a child from another marriage, Daddy’s half share of the house will pass directly and equally to his 2 children. Mommy will retain the right to live in the home during her lifetime and retain her half ownership in the home.
The flower shop and commercial property are classified as community property. Daddy’s half share of the business and commercial property will pass directly and equally to his two children. Mommy will keep her half ownership in the business and commercial property. Mommy will now run the business with her child and stepchild. Did she want partners in this business?
Since Daddy owned the lake house before he met mommy, it is classified as separate property. All of the lake house will go to the children but Mommy will have a one-third life interest in the property. he may not have unlimited access to the lake house as she once did.
What will happen to the bank account they saved for their retirement? It will be split in half, Mommy will retain $100,000 but the rest will be split equally between Daddy’s two children. Will Mommy have enough to retire now?
If you find yourself in a similar situation or to avoid issues like these, contact us.