Focus on Wealth Planning #8: Estate planning for blended families
Estate planning for blended families
Protecting your family and transferring your wealth efficiently requires preparation — especially if there are children born of different unions. To make sure no one is left out and your estate is settled under the right family, legal and tax conditions, you need to plan, reflect and make arrangements.
Key considerations of blended families
Passing down your wealth in a blended family involves two key considerations:
the desire to protect your spouse, while guarantee equitable rights for your children born of each union.
Failure to make arrangements may cause disputes after your death if your wishes and objectives are not clearly expressed. Your partner’s status — live-in, civil union (‘pacsé’) or married — will determine their right to inherit. Likewise, the children of a first union are not considered heirs of the parent’s new spouse in the second union.
For example: Anne and François marry after a first union. They have 2 children together. Anne has a daughter from a previous relationship; François has 2 children from his first marriage.
Upon François’ death, his estate will be divided between Anne and his 4 children: 2 from his first marriage and 2 with Anne. Upon Anne’s death, Anne's estate and her share of François’ estate will go to her children: her daughter and their 2 children in common. Thus a portion of François’ estate will not go to his children from his 1st marriage.
Solutions for planning your estate
There are solutions to protect your loved ones and organise the transfer of your estate:
- by writing a will you can personalise how your estate is divided when you die, while respecting the rights of reserved heirs, for example by providing better protection for your surviving spouse and/or ensuring equal treatment for all your children.
- under a shared gift arrangement (‘donation-partage’) you can bequeath assets in your lifetime, with your beneficiaries’ agreement, creating a true family pact. As long as all your children are stipulated in the deed, the value of transferred assets are fixed, regardless of any future changes in value.
- You can also ensure your surviving spouse is provided for by adapting your marriage contract. However, when there are children from previous unions, close attention must be paid to the advantages of the contract, such as bringing personal assets into the community of property, and full transfer of ownership and ‘preciput’ clauses that favour the spouse. These may be considered as gifts and therefore reduced.
- In some cases, adopting your stepchild can guarantee them additional rights and ensure equal treatment among all your children during inheritance.
The flexibility of life insurance
Life insurance is a very popular tool for passing on wealth in blended families.
It allows the policyholder to freely choose their beneficiary, i.e. their spouse or children.
The capital paid to the beneficiaries does not form part of the deceased’s estate. It is generally exempt from inheritance tax if the premiums were paid before the policyholder turned 70, but is still subject to a specific tax. Unless the premiums are very high or the policy is reclassified as an indirect gift, the premiums paid by the policyholder are not subject to reconciliation or reduction rules. The beneficiary clause determines who receives death benefits but also the nature of their rights — full ownership, usufruct or bare ownership — all within a favourable tax framework.
While this is a flexible and effective estate planning tool, the beneficiary clause must be drafted with utmost care.
How we support you
Protecting and passing on your estate within a blended family requires thoughtful planning, and often professional guidance. With careful preparation, you can ensure your family's peace of mind and avoid future conflicts.
Naturally, these matters should be discussed with your notary. Our wealth planners at Societe Generale Private Banking are also here to offer their insight and contribute to these discussions alongside your usual advisors.
Would you like to discuss this subject further with us?
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