An Insightful & Practical Guide to Estate Planning for Blended Families in Texas

Avoid Common Pitfalls & Make Better Estate Plans for Non-Traditional Families in Texas

Estate planning for blended families can be uniquely complex, opening up distinct issues and new challenges. With evolving estates, complicated family relationships, and more on the line, blended family estate planning can be vital for those who are serious about preserving legacies, mitigating estate taxes, and providing for their loved ones in the future. 

Because no two blended families — or their estates — are exactly alike, taking a cookie-cutter approach can hinder effective estate planning for blended families in Texas. Instead, personalized strategies are essential to cover your bases and accomplish your objectives. 

Here’s why, with a closer look at: 

To get more enlightening information about different aspects of estate planning in Texas, check out our Blueprint for Family Business Estate Planning, our Small Business Guide to Texas Trusts, and Crucial Facts to Know about Sunsetting Estate Tax Exemptions in 2026. 

For confidential answers specific to your circumstances and needs, simply contact TAW Law Texas. 

Blended Family Estate Planning in TX: 5 Essential Considerations

Unlike traditional families, blended families include “step” and “ex” relationships, with each party of a re-marrying couple potentially bringing children and their own estates into a new marriage. With that, some specific legal matters can come into play, often creating intricate, pricly, and possibly high-stakes decisions involving the following.

1. Beneficiaries & Unintended Disinheritance

Whether or not you have biological children from a previous marriage, any stepchildren that are part of your blended family will not automatically inherit part of your estate if:

• You die without a will: State law (in Texas Estates Code § 201.001) does not recognize stepchildren as legal relatives who are entitled to inheritance when no will has been left by a decedent.
• You do not name stepchildren as beneficiaries: Updating wills and trusts to include stepchildren — or creating new trusts that name stepchildren as beneficiaries — does not happen automatically when blended families come together. Estate plans need to be revised to include formal beneficiary designations for any stepchildren whom you’d want to receive an inheritance.

As blended families come together, you may not just want to include new beneficiaries; you may also want to exclude others, replacing them to reflect your new relationships and wishes. That’s another reason to review beneficiary designations, particularly those tied to an ex-spouse, like life insurance policies or other assets. 

2. Balancing Interests

Striking a balance between providing for your current spouse, loved ones from prior relationships, and children from your new marriage is possible with thoughtful, strategic estate planning. To that end, it’s often crucial to plan for factors like (but not limited to): 

• Ex-spouses: What would you want your ex-husband or ex-wife to inherit — or not be able to claim inheritance rights to — after you pass away? While some may want to include exes in blended family estate planning, others may be intent on preventing an ex from trying to inherit any part of an estate. Either way, exes can pop up in existing estate plans, and handling that in light of current circumstances can be critical in estate planning for blended families.
• Current spouses: What assets would your current spouse be able to access immediately if you pass away? What else would they need or should they inherit with minimal hassle? Taking care of a current spouse can be a key priority (among others) in blended family estate planning, and that may require some extra steps to ensure assets from a previous relationship don’t end up with an ex instead of your current spouse.
• Children: Biological and stepchildren from previous and current relationships can all come into play with estate planning for blended families. Over the years, this could turn into new grandchildren and step-grandchildren, any or all of whom you may not want to exclude from your estate plan.
• Others: Former or new in-laws, nieces, nephews, cousins, and many others can also be key parties to consider in blended family estate planning. Beyond that, there may be good reasons to name close friends, other loved ones, or even special charities (or other organizations) as beneficiaries in blended family estate plans. 

3. Executors & Powers of Attorney

Who have you named as your executor(s)? Who has power(s) of attorney? Do those designations still align with your current wishes and blended family?

Since each of these roles comes with so much responsibility and legal authority, you need to 100% trust and rely on the person (or people) who you’ve named as your agent(s) to fulfill the position and carry out your wishes.

So, if you created a will, powers of attorney, or an estate plan in a previous marriage, double check the executor and agents you selected back then. They may not be who you want to serve in those roles today. 

4. A Family Business

Estate planning for a family business is a world of its own, and that world can collide with blended family estate planning, putting company interests in the mix with shifting family dynamics. Depending on the business and the parties involved, it may be crucial to consider issues like (and not limited to): 

• Succession planning
• Family limited partnerships (FLPs)
• Family office granted retained annuity trusts (GRATs)
• Estate taxes, available exclusions, and changing exemptions 

5. Potential Infighting

Infighting after a death in the family can translate into heated will contests and extended contested probate cases, with stressful, expensive, and potentially relationship-ending battles over: 

• Last-minute changes to an estate plan
• Different versions of a will
• The decedent’s last wishes
• Specific terms, assets, beneficiaries, and more 

This risk of infighting can spike in blended families, especially when there’s no clear, current version of a will or estate plan, creating more leeway for any involved party to lean into their own ideas of what you would have wanted.

If you’re diving into blended family estate planning, you may not need to consider every issue discussed above — or it may be prudent to consider these and others. 

Either way, the experienced estate planning attorneys at TAW Law have a deep understanding of blended family estate planning, and we’re ready to share more whenever you need more answers geared toward your circumstances.

8 Potentially Beneficial Trusts for Blended Families in TX

Trusts can be a pivotal component in estate planning for blended families, offering several options for managing and, ultimately, distributing distinct types of assets to specific beneficiaries. With the ability to fully customize the terms of these devices, trusts for blended families can earmark certain assets for any beneficiaries you, the grantor, choose. 

For blended families in Texas, here are some of the various trusts that can be advantageous in estate planning, along with some potential benefits of each.

1. Revocable Living Trusts

A revocable living trust is a flexible device that can “own” certain assets while letting you retain control over the trust during your lifetime. Upon your death, the trust becomes irrevocable, distributing assets to your chosen beneficiaries, like children or others, without the need for probating them. 

• Potential Benefits: Revocable living trusts can be optimal for various types of assets and beneficiaries, including biological relatives, in-laws, step-relatives, and more. Providing an avenue for bypassing probate, revocable living trusts can be useful for evolving needs, giving you the opportunity to change beneficiaries, assets, and the terms of the trust as your wishes and family evolve.
• When to Set It Up: As long as you’re of sound mind, there’s no wrong time to create a revocable living trust. Still, setting up one of these trusts sooner, rather than years or decades after remarrying and blending families, can be preferable, keeping certain assets disentangled from marital estates, exes, and more.  

2. Bypass Trusts (A-B Trusts)

A Bypass Trust, also known as an A-B Trust, splits your estate into two entities upon your death:

1. Trust A for your surviving spouse
2. Trust B for the decedent (you)

While your surviving spouse would have access to Trust A, they would only have access to Trust B if the terms of the trust allowed for it (in full compliance with the applicable laws). Regardless, you would have set these terms and designate your beneficiaries, who could include stepchildren, parents, in-laws, and other loved ones. 

• Potential Benefits: A-B Trusts can offer a way to address estate tax concerns, name the beneficiaries of your choice, and ensure your current spouse would be provided for after your death.
• When to Set It Up: Creating A-B Trusts soon after a second or subsequent marriage is usually judicious. It’s also advisable to consider this option whenever you’re engaging in blended family estate planning. 

3. Qualified Terminable Interest Property (QTIP) Trusts

As a specific type of A-B Trust, QTIP Trusts are irrevocable trusts that let you provide income to your surviving spouse while the “principal” asset is reserved for any beneficiaries you choose. With these trusts, the surviving spouse can collect income, as specified in the terms of the trust, until they pass away, and: 

• The income for the surviving spouse is not transferable to any other party.
• The surviving spouse can continue to collect this income even if they remarry at any point later.
• The surviving spouse will not be able to access or alter the assets held by the trust. 

When the surviving spouse dies, the assets remaining in the QTIP Trust will, then, be distributed to the designated beneficiaries. 

• Potential Benefits: QTIP Trusts can provide essential financial support to surviving spouses while safeguarding an inheritance for children, grandchildren, and/or anyone else important to you. As such, QTIP Trusts can offer a way to provide for loved ones, regardless of what happens with your surviving spouse or their estate after you pass away. Effectively, that also means that if your surviving spouse remarries, a new step-whoever in your loved ones’ lives will not be able to redirect any inheritance you’ve left for your loved ones.
• When to Set It Up: Like A-B Trusts, establishing QTIP Trusts soon after entering into another marriage is a shrewd move that can pay off with priceless peace of mind. That can be especially true when children from one or more previous relationships are involved.

4. Irrevocable Life Insurance Trusts (ILITs)

An Irrevocable Life Insurance Trust (ILIT) can hold life insurance policies and proceeds outside of your estate, ensuring that the benefits are distributed according to your wishes — and without being subject to probate or estate taxes. 

With that framework, ILITs can own one or more life insurance policies, and they can be funded with cash gifts, taking out policies and paying the premiums during your lifetime. 

• Potential Benefits: ILITs in blended family estate planning can give you, as the creator of the trust, full control over who collects the benefits of these policies and the terms of asset distribution. Consequently, ILITs can be a viable method of reserving life insurance benefits for anyone from previous and current marriages who you want to receive them. These trusts can also help you shut certain people out from inheriting these benefits, like ex-spouses, if that’s what you want.
• When to Set It Up: ILITs cannot be changed once they are up and running, so only set them up when you’re sure about the terms and beneficiaries you’d like to put in place. Please be aware, however, that talking this out with an attorney can be incredibly helpful, especially when you’re balancing multiple competing interests. 

5. Generation-Skipping Trusts (GSTs)

A generation-skipping trust is an irrevocable trust that passes your assets directly to your grandchildren, bypassing your children. Useful for high-net-worth families, GSTs don’t necessarily have to name grandchildren as beneficiaries; anyone who is 37 ½ years younger than the grantor and, therefore, in a potential grandchild’s “generation” could be a beneficiary of a GST.

• Potential Benefits: When properly set up and funded, GSTs can be an effective estate tax mitigation strategy, providing a means of transferring wealth to grandchildren or much younger loved ones while reducing or minimizing any estate taxes their children (i.e., the intermediary generation) would have to pay in the process.
• When to Set It Up: If you have substantial assets, you may want to start thinking about GSTs when your blended family starts to include grandchildren.

6. Special Needs Trusts

A special needs trust is an irrevocable trust that can preserve assets for loved ones with disabilities. When you set up a special needs trust, you can fund it with assets that the designated beneficiaries can use for medical bills, ongoing care and treatment needs, living expenses, and more. You can also name any loved one with special needs from a past or current marriage as the beneficiary of this type of trust.

• Potential Benefits: Special needs trusts can allocate financial resources for any disabled loved ones without impacting their eligibility for certain government benefits or assistance, like Social Security and Medicaid benefits. With that, these trusts can be a practical way of ensuring loved ones with debilitating conditions or chronic illnesses have additional financial support after you pass away. Additionally, the assets in special needs trusts cannot be seized by creditors later, offering extra peace of mind that disabled loved ones will have lasting financial support.
• When to Set It Up: Creating special needs trusts can be a priority whenever a loved one is born or diagnosed with a physical or psychological impairment or disability, including conditions that require long-term care. Specifically, special needs trusts can be integral to set up after a loved has been born with a congenital condition, has been involved in an accident, or has been diagnosed with debilitating conditions (like multiple sclerosis, dementia, Alzheimer’s disease, or Parkinson’s disease). 

7. Testamentary Trusts

A testamentary trust is an irrevocable trust that is created through your will and that only takes effect after your death. As such, testamentary trusts are set up as the will is probated, with assets specified in the will used to fund the trust and the estate covering the costs of the trust.

Generally, testamentary trusts are used to hold assets for minor children. As a result, these trusts tend to establish the age at which asset distribution will start, with the trustee(s) named in the will managing the trust until beneficiaries reach the designated distribution age, like 18 or 25.

• Potential Benefits: Testamentary trusts can safeguard assets for minor children, allowing the trust’s assets to grow as minor children do too. Because these trusts provide substantial flexibility in the terms of asset distribution — and they can name multiple beneficiaries — testamentary trusts can be a compelling option for many blended families engaged in estate planning.  
• When to Set It Up: When blended families have young or new children, updating a will to include a testamentary trust may be a smart move. 

8. Grantor Retained Annuity Trusts (GRATs)

A GRAT is an irrevocable trust that can provide you, the trustmaker, with annuity payments during your lifetime while preserving the remainder of the trust’s assets for your chosen beneficiaries. 

With a GRAT, you fund the trust, ideally with an asset that appreciates in value, and draw at least one annuity payment a year from the trust for the term of the device. 

Once the term of the GRAT is up, the assets that remain in the trust will be distributed to your beneficiaries, including loved ones from past or current marriages, according to the terms you’ve established. 

• Potential Benefits: For blended families, a GRAT can be a strategic way to support retirement planning goals while transferring income-earning assets to loved ones across various marriages, relationships, and generations, from stepchildren, biological children, and parents to in-laws, ex-in-laws, and others. Additionally, GRATS can come in different forms, including short-term GRATs, single GRATs, and rolling GRATs, providing more options to accommodate various needs.
• When to Set It Up: Consider establishing a GRAT before sunsetting estate tax exemptions in 2026 or when acquiring (or planning for) appreciating assets. That can make it advantageous to create GRATs before and after another marriage, preserving valuable, income-producing assets for any loved ones of your choosing and transferring them outside of public view and probate.

The trusts discussed above may just be starting points for addressing your needs and concerns in estate planning for blended families. To navigate your options with the help of a trusted professional, contact an experienced estate planning attorney at TAW Law Texas. 

Blended Family Estate Planning in TX: 6 Helpful Tips

When you’re diving into estate planning for your blended family, here are some steps you can take to establish the right priorities, avoid common oversights, and set yourself up for success. 

1. Leverage Available Beneficiary Designations.

Name a beneficiary on all of your retirement accounts, life insurance policies, bank accounts, and other investments or assets with a pay-on-death (POD) or transfer-upon-death (TOD) designation. If you do, the beneficiaries you name can automatically take possession of those assets upon your death, instead of having to wait for them to pass through probate.

2. Consider No-Contest Clauses.

No-contest clauses, also known as in terrorem clauses, can minimize the chances of legal disputes by discouraging beneficiaries from challenging your will. Essentially, these clauses usually state that anyone who raises an unsuccessful contest or challenge will forfeit any inheritance they may receive. 

That can be extremely effective at limiting the risk of in-fighting in blended families, especially when there may be bad blood or confusion among blended family members and other loved ones.

3. Keep the Lines of Communication Open.

The more you can share about your estate plan and your wishes with your loved ones, the better. Transparency and communication can eliminate misunderstandings, set realistic expectations, and put everyone on the same page, contributing to less conflict and stress after you’re gone (and even if you die with a will).

4. Don’t Forget About Portability.

Portability can be an effective strategy in marital and blended family estate planning. Through portability, a surviving spouse can “port” or claim the federal estate tax exemption their deceased spouse didn’t use. That could substantially increase their available exemptions, potentially doubling the amount they can pass on tax-free. 

With another marriage, portability can shift from an ex-spouse to a new spouse, altering what may be available in terms of exemptions. Understanding how this plays out and impacts your available exemptions is integral to thorough estate planning for a blended family.

5. Revisit Your Blended Family Estate Plan Routinely. 

Make a plan to regularly review and update your estate plan, revisiting it at least once every year or two. When you do, be sure to take a fresh look at your: 

• Assets, particularly any newer items of value you have acquired or no longer own since the last time you engaged with your estate plan 
• Relationships, including any new births in the family, recent estrangements, or deaths of those who could be named in key roles in your estate plan
• Executor, trustee(s), agent(s) of your power(s) of attorney, and/or beneficiaries, including your POD and TOD designations
• Estate plan as a whole in light of any recent or upcoming changes to estate tax exemptions and/or pertinent laws

Things can change fast in life and blended families. If you’re routinely reviewing your estate plan, you can be more confident that you’re addressing and updating key terms and devices promptly.

6. Work with an Experienced Estate Planning Attorney in Texas.

A lawyer can help you identify the best strategies, devices, and terms to include in your estate plan, based on the dynamics of your blended family, important relationships in your life, your assets, and your objectives. 

If you go at it alone or rely on generic online tools to create your estate plan, you could be overlooking essential considerations, useful devices, or integral strategies that may do more to achieve your goals and preserve more for your loved ones. 

How to Find Out More About Estate Planning for Blended Families in Texas 

Whether or not you’re new to blended family estate planning, the counsel and support of an experienced attorney can go a long way toward making more informed decisions — and creating more solid plans for the future. 

To talk to an experienced blended family estate planning lawyer in Austin, Texas, contact TAW Law Texas.

Email us or call 512-827-9212 to talk to a trusted
estate planning lawyer in Austin now.

As leading estate planning attorneys in Austin, TAW Law Texas has a long-standing reputation for extraordinary representation, strategic counsel, and value-focused solutions. We routinely represent blended families and others throughout Travis County, Williamson County, Bastrop County, Blanco County, Hays County, and beyond. 

We are also committed to doing more and simplifying whatever we can for our clients. That’s why we offer two tiers of probate representation, including premium probate services. We invite you to check out our reviews to see what our clients have to say about us and how we may be able to help you.

Todd A. Wilson

Todd A. Wilson has been practicing law since 2007, with the aim of educating all strata of society and sharing crucial insights about the importance of estate planning, probate, and more.

The Law Office of Todd A. Wilson (also known as TAW Law TX) offers affordable estate planning and probate services.

*The header photo for this blog shows attorney and non-attorney staff at TAW Law Texas.

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