Planning for a Non-Traditional Family (Which Is Probably Yours)

Families come in all shapes and sizes. Here’s how to make sure yours is financially protected regardless of who’s part of it.

A dad and his little girl clean the kitchen together.
(Image credit: Getty Images)

What do you think of when you hear the word “family”? In the past, many would think of the historical “traditional” family, with opposite-sex parents who have only been married to each other and have one or more healthy and thriving children who are under age 18 that are biologically related to both parents and living at home. In reality, though, families in the U.S. are far more diverse and complex, and the traditional family is not as prevalent as we might think.

The U.S. Census Bureau’s American Community 2019 Survey reports that only 19% of family households would be considered part of a traditional family, defined as a married couple living with children. The remaining family households include 7% single parents with children, 30% married couples without children living at home, and 44% with non-family living arrangements of various kinds. Adding these figures all up reveals the vast majority of Americans are now part of “non-traditional” family structures.

Meet Today’s ‘Modern’ Families

So, what is a non-traditional family? Working with our wide base of clients, we have seen a huge variety of family structures. And the planning for all these different types of relationships requires specific goal-setting and deliberate implementation of your financial and estate plans to make sure your intentions are carried out. Some examples of non-traditional families – or as I call them, “modern families” – include:

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  • Blended families
  • Divorced couples
  • Cohabitating couples
  • Same-sex couples
  • Intentionally single parents
  • Families with non-marital children (stepchildren, adopted children or foster children)
  • Grandparents raising grandchildren
  • Children serving as caregivers to their aging parents

How do you know you have done the best possible job in making sure your intentions are followed if you have a modern family? First you need to take the time to think about what your goals are before you even begin figuring out what kind of planning is appropriate for you. What are your priorities: Are you planning primarily for yourself? Do you want to protect a spouse or partner? What about your pets? Do you want to make sure your kids have a safety net but expect that they should be mainly financially independent? Do you have an extended family member with a disability whom you need to provide for? Write down all the things that you want to consider and share those goals with your financial adviser and estate planning attorney to begin the planning process.

How a Grandson Almost Got Left Out of an Estate Plan

Start by defining who you consider to be your family and recognize that in a “non-traditional” set of circumstances, you need to be very specific. For instance, I worked with a client who told me all about how much they loved their grandson, and one of their key legacy goals was to make sure his college education would be paid for out of their estate. Upon further discussion of their family structure, I realized that their grandson would not be included as a beneficiary under the terms of their current estate planning documents, which simply listed their issue (meaning their child and her children) as beneficiaries.

In this case, the little boy they completely loved as their grandson was not biologically related to them – he was actually their daughter’s stepchild – and therefore did not qualify as their grandchild as defined in their documents. We completed a restatement of their revocable living trust so that stepchildren and step-grandchildren were specifically included as beneficiaries to solve this problem.

A Client Balances Wishes for Her Second Husband with Her Children

In blended families, we often see dual interests for both the spouse from a subsequent marriage and the children of a first marriage. As an example, I work with a couple who now live in the home that the wife lived in with her first husband. This home was where she raised her children from her first marriage. The home is large and expensive to maintain, and the assets used to cover the household expenses are her separate property.

Should something happen to the wife, the second husband could not afford to live in the house unless she left sufficient funds in trust to provide for his living expenses. Since the wife feels the house is home base for her children, she wants to leave the property to her children after her death. However, she also wants her second husband to be able to enjoy the lifestyle they currently share together.

How do you provide for what seem to be competing interests and be fair to all parties? We created a use trust that would be established after her death, which would have enough funds to cover the home maintenance expenses and allow the husband to live there until he passed away or no longer wished to live in the home. At that point, the house and any assets remaining in the use trust would pass to her children. This arrangement allowed for both the second husband and the children to have their interests protected.

The Bottom Line: Be Open and Honest

The hit television show Modern Family showed how a variety of relationships can exist in a loving family. It also reflected the reality of American families today: They are as every bit as complex and varied as the people who comprise them. They also share many of the same joys, challenges, traditions and milestones.

Regardless of your family’s makeup, you can honor your bonds with careful and specific legacy planning. The key to ensuring your intentions are fulfilled is to be open and candid about your goals for your loved ones with your financial and estate advisers so they can give expert advice on how to best achieve your wishes and secure your modern family’s future.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Kara Duckworth, CFP®, CDFA®
Managing Director of Client Experience, Mercer Advisors

Kara Duckworth is the Managing Director of Client Experience at Mercer Advisors and also leads the company’s InvestHERs program, focused on providing financial planning to serve the specific needs of women. She is a CERTIFIED FINANCIAL PLANNER and Certified Divorce Financial Analyst®. She is a frequent public speaker on financial planning topics and has been quoted in numerous industry publications.