Seems like almost nobody lives in a so-called traditional family anymore. With a sky-high divorce rate, many Americans can call their family yours, mine and ours. How to manage money for a blended family can pose special challenges. To learn the key things you need to know to keep your blended family on an even keel, we talked to Emily Bouchard, an advisor at the Wealth Legacy Group and author of Estate Planning for the Blended Family.
"The more complex the family is, the more complex the conversations about money will be," she says. I tell her about a family I know who struggled with the doctrine of fairness because one set of kids was college-bound and the other set was not. She confirmed that paying for college can be a crunch time for blended families. "You have children that you care about from previous marriages and maybe the current marriage too. There are different value systems about college. If education isn't valued, there are probably no savings. The other family may value college and have saved for it. Everyone wants the best education for their children," Bouchard says. How to best transfer the value of education and get kids the education they want is the goal. "You need to open that conversation understanding where they're starting from, and where they want to go. Love and emotional support is something you can offer all the children in your lives. In financial support, it can be different."
Fair Is Not Necessarily Equal
The most critical thing Bouchard said in our conversation was this simple statement: Fair is not necessarily equal. "It's so important in blended famlies to be very clear on that. There are a lot of things we can be grateful for. That a parent is with someone he or she loves and is happy. Whether you're happy about that union or not is another story. How that union impacts you can have positive and negatives."
The Power of Resiliency
"The world is set up with a lot of challenges," Bouchard says. "The more we can support our children in being resilient, the better." That starts with being willing to have the difficult conversation, saying "I get that you're unhappy. How can we move forward given that this is the reality?" By phrasing it that way, you're presenting a choice rather than an ultimatium.
Playing Against Type
"We all have different ways of relating," Bouchard says. "We represent archetypes." Understanding your archetype and trying to move toward another clearly defined model can be the key to success. Bouchard offers an example of how this might work: "Say you have a couple, and the husband has two kids from a prior marriage, so does the wife. He has saved for his kids' college, she hasn't. He may say it's my way or the highway. That's a tyrant archetype. Not much room for conversation. That pattern invites the wife to be the victim/martyr type and create a lousy dynamic for making decisions."
She describes how a family she worked with sorted this out. "One couple I worked with had two kids together, and he had two from a prior marriage. They were creating estate planning documents. At the end of the process, she refused to sign. She had gone along, gone along, gone along. This was her first way to have a say in it."
The woman went two years without signing, and the family brought in Bouchard as a blended family money coach. "I worked with them to really look at the archetypal patterns and what was getting in the way of signing documents." The couple worked with Bouchard every other week for four months, bringing forward new patterns and learning new ways to talk about money. "I encouraged him to be a warrior instead of a tyrant. This meant he would allow her to have a voice as well. I worked with her to tap into her warrior too, learning to be more empowered. Then we played with the other types – the magician and the creator/artist — to come up with new approaches and find common ground."
Ultimately, the couple came up with a strategy that addressed all of their concerns and signed the new documents. That wasn't the end, though. "Then we had a meeting with the four adult children, and the couple got a chance to show them how they came to this decision." It opened up a conversation, allowing the children to talk about their own financial planning. The parents ended up setting aside some of their estate for their grandkids' education.
Bouchard urges us to use these crossroads to have important conversations about money. For more information about how to manage money in a blended family, you can check out Bouchard's firm's website.