Note: this article is not intended to provide investment, legal, tax, or accounting advice. Before making decisions with investing, legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation.

Blended families are increasingly common, and so are the unique financial, legal, and caregiving questions that come with them. What we’ve seen at True Link is that when a child with special needs is part of the family, planning becomes even more important — not because the family is “nontraditional,” but because the layers of care, responsibility, and decision-making span more people and more relationships.

For these families, thoughtful planning can help ensure continuity of care, protect benefits, and reduce conflict or confusion later on.

The Modern Blended Family

Blended households — where a stepparent, stepsibling, or half-sibling is part of the family — now make up a significant share of U.S. families. Research estimates that about 16 percent of children live in a blended family today, and more stepfamilies form every year.

During the same period, more children are being identified with disabilities, developmental delays, or chronic health needs. Nearly one in four U.S. children now has a special health care need, which may include neurodivergence, chronic illness, mobility limitations, or behavioral health conditions.

The combination of more complex household structures and more children with long-term support needs means blended families increasingly require careful, coordinated estate and financial planning.

Unique Financial Planning Challenges

Estate planning can be delicate in any blended family, simply because more people are invested in the outcome. When a child with disabilities has lifelong support needs, families may also face questions about how to allocate resources, who should take on which responsibilities, and how to ensure care continues consistently. Here are some examples of potential complexity in financial planning for blending families.

• Caring for an individual with disabilities can cost more than a million dollars. Families may need to dedicate more resources to a child with special needs to ensure their long-term care and financial security, which can put pressure on the overall estate plan — especially when multiple households or sets of children are involved.Blended families may grapple with what’s “equal” versus “equitable.” An equal split might not account for the higher lifelong costs of caring for a disabled child. However, prioritizing them might cause resentment among other siblings if they feel a lack of transparency or inclusion in financial decisions. Clear communication can help set expectations and prevent misunderstandings later.
• In these situations, selecting a guardian can be tricky. Biological parents may prefer their own relatives. However, a stepparent who has helped raise the child might be the most familiar caregiver. But stepparents typically lack legal standing unless they formally adopt the child or are explicitly named in legal documents, which can pose legal problems in guardianship proceedings or medical decision-making.
• How to fund Special Needs Trusts (SNTs). These trusts allow beneficiaries to receive an inheritance without disqualifying them from means-tested government programs like Medicaid. Some blended families face challenges in funding these trusts fairly (e.g., should only biological parents contribute or stepparents, too?).
• Inheritance laws usually do not recognize stepchildren unless specifically included in a will or trust. Failing to create an estate plan could render a disabled child ineligible for public benefits. And a surviving stepparent may not have any obligation or authority to carry out a biological parent’s unrecorded wishes.
• Blended families may have to navigate preexisting divorce agreements that include child support, alimony, or financial provisions for other children. These obligations can strain resources and complicate the funding of SNTs.
• After a biological parent’s death, questions may arise about whether child support should continue as direct payments to the trust or be recalculated, which could require court interpretation.
• Parents want their assets to benefit their child for the long term, including after the death of a new spouse. This can lead to the use of trusts that limit the surviving spouse’s access to funds, potentially leading to litigation.
• Further complications can arise when a surviving spouse remarries. Assets intended for a child with special needs could be diverted to a new partner or their family.

These challenges underscore the need for careful, coordinated planning. When roles and resources aren’t clearly outlined, misunderstandings can arise and a child with disabilities may not receive the continuity of care and financial protection their family intended. 

Careful Estate Planning Is Key

Special needs blended families can surmount these challenges through clear planning that balances compassion and legal precision. Here are some options to consider:

• Establish an SNT tailored to the child’s specific needs and coordinated with the family’s overall estate plan. Funding sources should be secure and clearly identified.
• Make appropriate beneficiary designations for insurance and qualified retirement plans that won’t put a child’s government benefits at risk.
• Draft letters of intent to guide future caregivers and trustees regarding the child’s preferences, routines, and medical needs.
• Consider co-trustees or trust protectors to help facilitate long-term oversight when trust administration spans multiple family branches and generations.
• Educate extended family about gifting through the appropriate legal structures to avoid unintentionally jeopardizing a disabled child’s benefits.
• Execute clear wills, trusts, and guardianship designations. Update these regularly and after life changes like remarriage or the birth of additional children.
• Plan for the long term: Estimate the special needs child’s lifetime costs (e.g., therapies, housing, medical care) and secure funding through SNTs, life insurance, or ABLE accounts while addressing other children’s needs to maintain family harmony.
• Review benefits eligibility regularly. Rules for programs like Medicaid and Social Security Disability Insurance can change, so monitor how inheritance or guardianship plans could affect government benefits.
• Host family meetings to set expectations, clarify roles, and build consensus around care and inheritance decisions.
• Engage a special needs or elder law attorney, financial planner, and possibly a mediator. They can tailor plans to your family’s structure, ensuring compliance with state laws and benefit programs.
• Coordinate with family law attorneys to address divorce decrees, child support obligations, and spousal rights when creating your estate plan.

Thoughtful planning and inclusive conversations go a long way in supporting a child’s long-term care. By addressing decisions early and revisiting them as life changes, blended families can build a sense of stability and shared commitment.

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