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Estate Planning in the Age of Stepfamilies

By Sarah Foster

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Today, according to the Pew Research Center, more than 4 in 10 Americans have at least one step relative in their family– either a stepparent, a step or half sibling or a stepchild. The National Center for Family and Marriage estimates that about one-third of all weddings in America create stepfamilies.

A recent trust case from North Dakota highlights the importance of taking current and potential step relationships into account when planning your estate. In re Matthew Larson Trust Agreement, William and Patricia Clairmont appealed a district court judgment interpreting two trusts they had created for their grandson, Matthew, and dismissing their petition to reform the trusts they had created in 1996 and 2009.

In both of the trusts at issue, “the brother and sisters” of Matthew were contingent beneficiaries. After the trusts were created, the Clairmonts’ daughter,Cindy (Matthew’s mother), divorced Matthew’s father, Greg, and Greg remarried and had two children with a second wife. In March 2011, Matthew died suddenly and unexpectedly at the age of twenty-five without a wife, children or a will.

Under North Dakota’s law, Greg’s two children with his second wife were technically “brothers and sisters” of Matthew and, thus, eligible beneficiaries under the trust. The Clairmonts argued for an interpretation of the trust that would exclude Matthew’s stepsiblings as beneficiaries or, alternatively, for reformation of the trust to include language that only lineal descendants of the Clairmonts could benefit from the trusts.

Ultimately, the North Dakota Supreme Court granted the Clairmonts’ petition for reformation of the trusts based on evidence that the Clairmonts made a mistake of law by interpreting the phrase “brothers and sisters” to include only full blood siblings and based on testimony by the Clairmonts themselves on their intention to benefit their lineal descendants alone. However, the case certainly stresses the importance of addressing step-relations in your estate plan whether or not you are already a member of a stepfamily.

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