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?
GENERAL DISCLAIMER:
Societe Generale Private Banking is Societe Generale Group’s business operating through its head office at Societe Generale SA, as well as departments, branches and subsidiaries located in the areas referred to below, under the Societe Generale Private Banking brand, and is the distributor of this document.
The information shared on this page is for information purposes only and may be amended without prior notice. Its content is not intended to provide an investment service. In addition, it does not constitute investment advice or a personalised recommendation on a financial product, or advice or a personalised recommendation on insurance, or any form of canvassing, or legal, tax or accounting advice from any Societe Generale Private Banking entity whatsoever.
The offers related to the businesses and to the wealth management and financial information referred to on this page depend on each client’s personal situation, the legislation that applies to them, and their tax residence.
Therefore, these offers may not be suitable or authorised in all Societe Generale Private Banking entities. Furthermore, access to some of these offers is subject to specific eligibility conditions. Certain offers mentioned may incur various risks, involve potential loss of the entire amount invested, or even unlimited potential loss, and consequently may be restricted to a certain category of investor, and/or be suitable only for experienced investors who are eligible for these types of products, services and offers.
Contact private banker to find out whether these offers are suited to your needs and adapted to your investor profile.
DISCLAIMERS BY JURISDICTION
France: Unless indicated otherwise, this document is published and distributed by Societe Generale, a French bank authorised and supervised by the Autorité de Contrôle Prudentiel et de Résolution (French Prudential Supervisory and Resolution Authority), located at 4 place de Budapest, CS 92459, 75436 Paris Cedex 09, under the prudential supervision of the European Central Bank (ECB) and registered with ORIAS as an insurance broker under number 07 022 493, orias.fr. Societe Generale is a public limited company (société anonyme) under French law, with capital stock of €1, 003, 724, 927.50 as of 17 November 2023 with its registered office at 29 boulevard Haussmann, 75009 Paris, France, and registered with the Paris Trade and Companies Register (Paris R.C.S) under the unique identification number 552 120 222. Paris. More details are available on request or online at www.privatebanking.societegenerale.com/.
Luxembourg: This document is distributed in Luxembourg by Societe Generale Bank Luxembourg, a limited public company (société anonyme) under Luxembourg law, registered at Luxembourg’s companies house under the number B 6061 and registered credit institution regulated by the Financial Sector’s Surveillance Commission (CSSF) under the control of the European Central Bank (ECB), and whose registered office is located at 11 avenue Emile Reuter – L 2420 Luxembourg. More details are available on request or online at www.privatebanking.societegenerale.lu/. No investment decision should be made solely on the basis of this document. Societe Generale Luxembourg accepts no responsibility for the accuracy or otherwise of information contained in this document. Societe Generale Luxembourg accepts no liability or otherwise in respect of actions taken by recipients on the basis of this document only, and Societe Generale Luxembourg does not hold itself out as providing any advice, particularly in relation to investment services. The opinions, views and forecasts expressed in this document (including any attachments thereto) reflect the personal views of the author(s) and do not reflect the views of any other person or Societe Generale Luxembourg unless otherwise mentioned. This document was prepared by Societe Generale. The CSSF has neither verified nor analysed the information contained in this document.
Monaco: This document is distributed in Monaco by Societe Generale Private Banking (Monaco), a joint stock company (SAM) under Monaco law registered at 11 avenue de Grande Bretagne, 98000 Monaco, Principality of Monaco, governed by the French Prudential Supervisory and Resolution Authority (ACPR) and the Financial Activities Supervisory Commission (CCAF) of Monaco. Financial products sold in Monaco may be restricted to qualified investors under Act no. 1339 of 07/09/2007 and Sovereign Order no. 1285 of 10/09/2007. More details are available on request or online at www.privatebanking.societegenerale.com/.
Switzerland: This document may constitute advertising within the meaning of the Swiss Federal Act on Financial Services (LSFin). It is distributed in Switzerland by Societe Generale Private Banking (Switzerland) SA (SGPBS or the Bank), whose registered office is located at rue du Rhône 8, CH-1204 Geneva. SGPBS is a bank authorised by the Swiss Financial Market Supervisory Authority (FINMA). This document may under no circumstances be considered as investment advice or recommendations from SGPBS. The Bank recommends obtaining the advice of a professional before acting or not acting on the basis of this document, and accepts no responsibility in relation to the content of this document. Financial instruments, including shares in collective investment funds and financial products, may only be offered in compliance with LSFin. More information is available from SGPBS on request or online at www.privatebanking.societegenerale.com.
This document is distributed neither by SG Kleinwort Hambros Bank Limited in the United Kingdom, nor by its branches in Jersey, Guernsey and Gibraltar which operate collectively under the “SG Kleinwort Hambros” brand. Accordingly, the information provided and any offers, wealth management and financial businesses and information do not concern these entities and may not be authorised by these entities nor adapted to these regions. More information on the activities of Societe Generale Private Banking entities located in the United Kingdom, the Channel Islands and Gibraltar, including supplementary legal and regulatory information, is available at www.kleinworthambros.com.
Whether transferring real estate for personal use or income, it is crucial to plan early to avoid tensions and strained...
The European economy is at a turning point. After years of cheap loans, interest rates have taken a sharp upward turn....
Very rarely does the clink of a coin tossed clumsily in the air play into financial decisions. Rather, they tend to be...
Focus on Wealth Planning #5: Structuring and managing your wealth