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Why You Need a Blending Agreement for Your Blended Family

Blended or step-families come in all different shapes and sizes. The way that these unique families handle finances comes in just as many varieties. Some families go for the more traditional route of merging all financial matters into joint accounts and making all financial decisions together. Other families choose to keep everything separate and operate individually in financial matters. Other families chose a hybrid method of maintaining some accounts separately and using a joint account for shared expenses. Either way money is a large part of any family’s life and should be handled with care. It takes a great deal of communication and transparency to keep financial matters in check and to keep money from ruining your family.

Take Eli and Greg. Eli is significantly younger than Greg. Eli is a highly compensated physician whose income is at least double that of Greg’s salary as a welder. Eli does not have any children. He has focused all of his time and attention building his career and traveling. Greg on the other hand, is a divorcee with two daughters who are close in age to Eli. Greg and Eli have decided to get married and move in together and are trying to decide on how they will handle their finances.

In addition to how they will handle their finances, Greg and Eli have a lot to think about. For starters, how will Greg’s children view Eli given that he is closer to their age than their father’s age? Greg’s two daughters are 19 and 24. Eli is 29. It is going to be difficult for Greg’s daughters to look at Eli as a step-parent even though once the marriage takes place that is what he will technically be to them. They had a hard enough time accepting the fact that Greg left their mother because of his newly discovered sexual identity. Welcoming Eli into their already established lives was not going to be easy. Where will Greg and Eli live? If Greg moves to Eli’s bachelor pad he will have to put his two daughters out and sell his family home. If Eli moves to Greg’s family home with he and his two adult daughters, he will have to contend with some serious boundary issues. Even if Greg and Eli decide to purchase a home together, they will need to have a serious discussion about the long-term plans of his adult daughters and how Eli is to interact with them.

Greg and Eli will need to figure out how they plan on handling financial and estate matters. Greg has a lot more responsibilities than Eli. Greg will likely have certain things that he wants to pass on to his daughters in the event of his death. Eli has more income than Greg, but will likely never have biological children of his own. Since Greg is significantly older, the likelihood that he will predecease Eli is very high. What will Eli’s relationship be with Greg’s daughters when Greg is no longer alive? Is Eli expected to leave anything to Greg’s daughters if Greg was to leave everything to Eli? All of these issues should be ironed out and discussed with full transparency before Eli and Greg take the leap.

Eli and Greg can outline their commitment to each other and how they will handle their financial affairs in a Blending Agreement. It is similar to a prenuptial agreement but looks to unify a blended family on all fronts. The Blending Agreement should outline a number of extremely important details that can be easily overlooked in a blended family:

  1. How day to day financial matters will be handled (paying bills, saving/investing for the future, allowances- if any, large purchases, spending limits requiring joint decisions)

  2. How medical issues including possible incapacitation should be handled (outlined in Advanced Medical Directives)

  3. How children should be handled (will vary depending on involvement of exes, age of children, court orders, and other unique factors)

  4. How household chores/responsibilities will be handled

  5. Any special needs in the family (things like aging parents that will need to be cared for, medical conditions of either spouse or their children)

  6. How any outstanding debts will be handled (discuss credit rating, credit cards, loans, child support, alimony, any other financial obligations)

  7. List out all of the assets (everything owned by both parties, bank/brokerage accounts, real estate, trust accounts, personal belongings, vehicles, collections)

  8. Discuss how each person’s estate is to be handled in the event of death of one or both spouses, be sure to create estate documents for memorialization (can use a Will or Trust instrument depending on estate goals, should update any out-of-date documents)

  9. Discuss how any long-term care needs will be handled and financed (using personal accounts, other assets, long-term care insurance)

  10. Discuss life insurance policies and beneficiaries on all accounts (look at beneficiaries on retirement accounts, bank and brokerage accounts, life insurance policies and the like)

As you can see, a Blending Agreement gives Eli and Greg total transparency into each other’s financial lives and opens the door for discussion about their respective families. It is a flexible agreement that can and will change over time. Children move out, relationships evolve, other children or grandchildren may be born and a myriad of other things may happen in the course of a couple’s life together. When the going gets tough the couple can always look back at their Blending Agreement and remember how they said they were going to handle said situation. There is nothing wrong with referring to the Blending Agreement as frequently as necessary and using it as a guiding tool for family unity and understanding.

A Blending Agreement can be used by an already married or cohabiting couple. It is best used by a couple contemplating marriage or cohabitation and trying to get a thorough assessment of what life with their future spouse or partner will look like. It is meant to bring about a sense of harmony and unification over matters that left unspoken will creep up and tear away at the foundation of your family. If you or someone you know would like to assess your need for a Blending Agreement to give structure and togetherness to your blended family, reach out to me at I am a licensed attorney and financial advisor who specializes in serving blended families with adult children. I want to help you to think about these issues and many more things impacting the financial and estate matters of your blended family.

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