Inheritance in a Blended Family: Senator Feinstein vs. the Blum Girls

For 50% of today’s wedding couples, it’s not their first trip to the altar. Moreover, 65% of those remarriages involve children from a prior marriage. Even in the best of blended families, it sets the stage for potential conflicts. As an estate planning attorney, my advice is to get in front of it. Plan ahead and be specific, reducing the risk of later friction among family members.

One such high profile battle involves Senator Dianne Feinstein. A recent New York Times article describes it as a “bitter legal and financial conflict that pits her and her daughter, Katherine Feinstein, against the three daughters of her late [third] husband Richard Blum” (no relation to me). Though Feinstein and Blum were both rich in their own right, that still doesn’t prevent fights over money. Feinstein’s daughter has filed two lawsuits on her mother’s behalf against trustees of trusts established by Blum: (1) to force the sale of a beach house, being used by Blum’s daughters at Feinstein’s expense; and (2) to compel distributions from Blum’s life insurance proceeds to pay Feinstein’s significant medical expenses. Blum’s trustees dispute the lawsuits as “a stepdaughter engaging in some kind of misguided attempt to gain control over trust assets to which she is not entitled.” They attribute this feud to a “long-standing animosity” between Feinstein’s daughter and the daughter’s three stepsisters.

At issue is how to interpret language in a marital trust established by Blum for his wife of 40 years. At Feinstein’s death, the assets will pass to Blum’s three daughters. That creates a natural tension, as anything spent now will reduce what the Blum daughters inherit later. As Dustin Gardiner discusses in a recent Politico article, questions arise: Does Feinstein need to spend her own money before she can access money in the trust? Does Feinstein’s “medical care” include paying for a security guard and a caretaker? When the trust is silent on questions like these, the trustees are left trying to determine what Blum intended. The more explicit the trust language is, the better. Don’t make the trustees have to guess which sets the stage for an ugly blended family feud like this one.

Unfortunately, such family feuds in today’s modern family are not uncommon. The perils of inheritance are especially acute in a blended family. In addition to friction involving stepchildren and stepsiblings, the spouses themselves are at higher risk. Consider this sobering statistic: 60% of remarriages end in divorce. As an estate planner, I urge couples about to marry again to cover as many hard questions as possible in a prenup, and to be explicit in drafting trust provisions.

Many of the solutions involve life insurance. In a recent speech I gave on Life Insurance Planning Opportunities, I included a section called “Blended Families Require Extra Considerations” addressing five scenarios:

1. Don’t Pit Stepchild Versus Stepparent
2. My Spouse Would Never Cut Out My Kids (Right)?
3. Equal or Equitable Between Sets of Children?
4. Use of Life Insurance and Prenup Planning
5. Quandary Over IRA Beneficiary

Click here to review that PowerPoint.

The Blum Firm is committed to helping families thrive from generation to generation. Our family legacy planning initiative is especially critical in helping non-nuclear families navigate the challenges. We would be honored to help your family protect its most precious assets—not just your financial capital but also your human capital.

Marvin E. Blum