If you haven't seen it, ABC’s Modern Family depicts the relationships and experiences between a fictional extended family. Throughout the series, the show addresses daily issues that many families can relate to. For a close-knit family such as this fictional one, estate planning is crucial to ensure that everyone is protected when one of them dies or becomes disabled or incapacitated.
While this is all for fun, we hope that looking at some of the issues this family would need to address as they prepare for such circumstances will encourage you to consider how these issues impact your own family.
The Family’s Various Businesses
Throughout the series, the family owns a variety of businesses. Whether it is a hobby, investment, or nine-to-five job, these businesses require special consideration when planning for their future.
How are these businesses owned? Depending on the ownership structure (sole proprietorship, partnership, corporation, limited liability company), what happens to the business at the owner’s death may already be dictated by the business’s official documents. If not, there needs to be legally enforceable documentation in place to facilitate the transition.
Who should ultimately end up with the business? For business owners, it is very easy to get caught up in day-to-day operations. However, it is important that you look to the future and proactively determine who should be in charge of your business. Just like Jay, if you want your child to continue your business, you must have that discussion with them and pave the way for them to take over.
Should the business interest go directly to the next generation or be held for them? Depending on the beneficiary's age, you may need to appoint someone to run the business until your child is sufficiently mature. Instead of relying on the state’s determination of when a child becomes an adult, you can provide specific instructions for when and how your child becomes involved in the business.
Multiple Generations of Blended Families
When determining who will receive their money and property, members of blended families must evaluate the bonds within their family. For instance, on several occasions, Jay refers to Manny as his son, and Manny spent many of his formative years living with his mother and Jay. On the other hand, although Dylan and Haley have two children together, Dylan also has children from his first marriage. Haley may not be that close to Dylan’s other children and may not want them to receive anything she owns individually (or what she may inherit from her parents). Because a stepchild has no legal right to their stepparent’s money and property, a legally enforceable last will and testament or trust needs to be put in place for a stepparent to leave anything to their stepchild at death.
Guardians For the Minor Children
Within this extended family, a few minors need guardians if both parents pass away. First, although Manny states that he wants to be Joe’s guardian in the event Gloria and Jay pass away, they need to name the person they want to be Joe’s guardian in their wills. However, naming an individual in a last will and testament or separate document is merely a nomination. This may not stop others from contesting the nomination. It may be wise for Jay and Gloria to have frank conversations with both of their families to avoid the possibility of a fight for guardianship and to prevent Joe from potentially being taken to a foreign country.
Lily and Rex are also minors who would need a guardian if their parents were to pass away. A fight between Cameron’s and Mitchell’s families will likely occur without an appropriate estate plan. Although Lily spent much of her life around Mitchell’s family, by the end of the show, Lily and Rex are moving with their parents to Missouri and will be living closer to Cameron’s family. Rex will arguably grow up with a greater bond with Cameron’s family, which could lead to conflict between the Pritchett and Tucker families if a guardian for these two children is needed.
Lastly, Poppy and George would need guardians if their parents died. Haley and Dylan may not have much money and property to plan for, but their precious children deserve at least basic planning, including naming a guardian and alternates. At the show's end, although Haley and Dylan are no longer living with Phil and Claire, they are still living close by. However, Dylan’s mother Farah started appearing once Haley became pregnant. She may want to raise the children should something happen to Haley and Dylan.
If you have minor children, you must consider who you want to raise them if you cannot. Although no one will ever care for them as you would, you must nominate someone in a last will and testament or separate writing (if your state allows for one). Although the court will still have to decide who will be the guardian, you can rest easier knowing that you have made your wishes clear. Also, by having conversations with your family members ahead of time, you may be able to reduce the possibility of fighting after your death if everyone understands your wishes.
Protecting the Surviving Spouse
All married couples face the question of what will happen at the first spouse’s death. Some couples, like Phil and Claire, have earned and accumulated most of what they had while married. It would be understandable for them to consider everything they own “theirs.” Both of them would likely want everything to go to the surviving spouse. However, when everything is given to a spouse outright, the hard-earned money and property are susceptible to creditors and predators. A naive and well-meaning person like Phil might become the victim of a scam artist and give large sums of money away based on a sad story. Alternatively, a successful woman like Claire could end up remarrying and, without proper planning, could accidentally disinherit Haley, Alex, and Luke by leaving everything to her new spouse. To protect what you leave to your surviving spouse, whether it is your first or third marriage, a qualified terminable interest trust can help. This type of trust can allow your surviving spouse to receive the income the trust generates annually, to withdraw principal for specific purposes such as health, education, maintenance, and support, while allowing you to determine what happens to any remaining money at your spouse’s death.
How Much Does Everyone Receive?
Within this blended family, there are many options for who will receive an inheritance from each person. When preparing his estate plan, Jay must consider how he wants to divide everything he owns. In his immediate family, he has a spouse, two adult children from a previous marriage, a minor son, and an adult stepson. He also has five grandchildren and two great-grandchildren. He must decide who gets what, how much, and when. He will need to ask himself if it is better to give everything to Gloria (possibly in a trust) for her needs during her life with the remainder to go to Claire, Mitchell, and Joe at her death—or if Claire and Mitchell should receive their portion of the inheritance while Gloria is still alive. Should he provide for Joe or leave that up to Gloria if she survives him?
When considering what to leave to a surviving spouse, it is important to remember that in some jurisdictions, a minimum amount must be given to a surviving spouse, known as the elective share. Also, if you reside in a community property state, your spouse may be entitled to some of your money and property if it was acquired during your marriage. While someone might think that their surviving spouse will be able to support themselves without an inheritance, it is important to have this conversation ahead of time. Without the proper documentation, a surviving spouse can unwind a plan if they have not been provided for in their deceased spouse’s estate plan and have not waived the right to their entitled minimum amount.
Phil and Claire will need to look at their own family situation and determine how their money and property will be divided among their children and grandchildren. They have three children who are very different and most likely would have very different needs. Haley, the mother of two, may benefit from receiving a larger share since she has two children to support. Alternatively, Phil and Claire could choose to set aside a sum of money specifically for their grandchildren. Alex may not need an inheritance given her education and employment opportunities. Luke, on the other hand, may need more financial assistance. A sum of money could be held in a trust for him, with restrictions to ensure that he is properly provided for, gets an education, and can invest in good business ideas while protecting him and his inheritance from bad business decisions.
For many families across the country, not just the fictitious ones on TV, an estate plan is a great way to ensure that you, your loved ones, and your hard-earned money are protected. We are committed to working with families of all shapes and sizes to craft a plan that is as unique and modern as you and your family are. Call Santaella Legal Group, serving all of California, at (925) 831-4840, or reach out to us here.