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Chapter 5

Understanding financial and legal matters /Financial and legal issues

The financial and legal issues that stepfamilies face can be quite complex. For example, financial and legal obligations to children and/or former spouses are often complicated by emotional and financial “baggage.” Usually there are a greater number of people involved sometimes that includes the courts.

It is understandable why stepfamilies have unique challenges. At the same time, partners in a stepfamily may actually have an advantage in one sense. They may be more realistic about and more aware of what these financial and legal matters are.

This chapter is designed to provide general information for Oregon stepfamilies. However, the specific facts of any situation will influence the way in which laws and regulations apply. It will also influence the way in which families respond and function.

For more information, consider consulting an attorney. Other professionals such as a financial adviser, mediator, counselor or therapist may also be a source of valuable assistance.

The Realities: Relationships

Partners often have different viewpoints about a lot of things, including finances. Each person brings past experiences, old spending habits, past assets and debts, and possibly legal and financial obligations to the relationship. Studies of remarried couples often indicate that financial matters are handled differently than in the previous marriage.

Former Spouse

Difficult financial dealings with former spouses may show little or no improvement after the divorce. In fact, financial problems may have been a major factor in the divorce.

Financial and legal dealings with an ex-spouse may have to be continued, especially if children are involved. They will likely be even more difficult. Understanding Financial and Legal Matters 5

Money to support the children provides a link between families. It also allows for continuation of the problems that were present before the divorce.

Guilt feelings, competition for the children, visitation struggles, and attempts to substitute money for time with the children can foster emotional conflicts.


Children may become especially powerful in these situations. They may use the opportunity to play one parent against the other to their own advantage.

Children can be in a position of having more information about both households than anyone else. They may use this knowledge to manipulate and obtain financial resources from both sets of parents.

For example, they may inform one set of parents about the money or things provided in the other home in an attempt to create competition between the families.

Custodial and Noncustodial Parent

The custodial parent and his or her spouse may make financial decisions about the children without consulting the noncustodial parent. This could be for such things as medical emergencies, braces for teeth, or summer camp.

Noncustodial parents may then be faced with expenses or requests for extra funds without having a chance to be involved in the decision. At the same time, their own household may be facing additional expenses, such as repairing the roof on the house. A feeling of lack of control can leave both parents and stepparents frustrated and bitter.

Partner with No Children

A partner who has no children may become resentful about the money leaving the household to support the other partner's children. Support for a former spouse may also be involved.

The resentment may increase if plans to have a baby or make a major purchase have to be canceled or delayed because of the previous legal or financial commitment. On top of that, the childless partner may feel guilty for feeling resentful.


In general, natural parents (whether married or not) are legally and financially obligated to support their children, usually until age 18. An older age can be specified if both natural parents agree. Support can be ended at a younger age if the child becomes “emancipated” by leaving home or getting married and the court agrees.

It is wise for the custodial parent not to expect any additional support for the children after that age unless it is specifically identified in the child support order.

Of course, there can be additional support if it is clearly agreed upon by the noncustodial parent, such as for college expenses. But the agreement may not be enforceable if it is not specified in the child support order.

As a general rule, stepparents have no obligation to support stepchildren.


Being legally and financially obligated is not necessarily the same thing as actually providing support. Former spouses may need to get help through local family and domestic courts to get child support that is not being paid.

The Child Support Enforcement program can help:

• Locate the absent parent.
• Identify the support obligation.
• Enforce the support order.

For more information, look in your telephone directory under Oregon State of—Social and Rehabilitation Services Child Support Enforcement.

Changes in Circumstances

A noncustodial parent may feel the court-ordered child support is unfair if his or her situation changes. Certainly, the loss of a job, a major illness, or a family emergency can reduce the ability to provide support.

The custodial parent may feel the child support is no longer adequate because of similar changes in circumstances. Or a child may develop special needs that require more money than expected.

Either of the natural parents can ask the court to look at these changes and decide if the existing support order is reasonable. Further, federal law suggests that child support orders be reviewed for possible changes every three years. The Child Support Enforcement program office may be able to provide you with information about the Oregon Child Support Guidelines.

You may want to think about some things before going to court, however. For example, will the change in support amount be worth the emotional stress and legal costs that may occur?

Legal Rights

Having stepchildren living in the home does not mean the stepparent has the legal right for care and custody of them. For example, in a medical emergency a stepparent cannot legally authorize medical treatment. Nor can the stepparent act on the stepchild'sbehalf in other ways, like authorize release of records or give permission for involvement in school-related activities.

In some cases, a handwritten note from the natural parent authorizing the stepparent to make certain decisions may be sufficient. However, this type of informal permission generally is not enough where substantial liability may exist. A more formal and legal document would be required for this type of power. An attorney can establish a limited power of attorney for this purpose.

Dependent Status

Stepchildren may or may not be viewed as dependents for employer fringe benefit purposes. Employers differ in their definitions of “family” and “dependent.”

It is important that stepfamilies carefully examine their employers' personnel policies and benefits. Are stepchildren covered for insurance purposes? What benefits, if any, would they receive in the event of an employed spouse’s death? Benefits from other sources not related to employment also need to be reviewed.

Even if stepchildren are considered dependents, certain actions or requirements may need to be met. For example, the employee may be required to notify the employer, the personnel officer, or the benefit carrier and sign formal documents indicating his or her wishes. The former spouse’s signature may be required when a noncustodial parent provides benefits for children. Or, the health status of stepchildren may need to be determined before they can be added to the health insurance coverage of a stepparent.


When stepchildren are adopted, legal rights and responsibilities between the children and their noncustodial natural parent no longer exist. An adopted child becomes the child of the adopting parent, just as if born to the parent.

From a legal perspective, adoption places the stepchildren in the bloodline of the adopting parent. For children under 18, the adopting parent mustprovide support and care with no opportunity to recover these costs from the natural parent.

Communication is Crucial

Whether the stepfamily is just forming or has been a family unit for a number of years, addressing the questions listed below may open communications. The problems may not necessarily go away, but at least it brings them out into the open. It also may help make expectations more realistic.

• Do you want joint or separate checking/savings accounts or some combination of the two? If separate accounts or a combination of joint and separate accounts are used, which expenses will be paid from each account?

• Are you willing to share information about what your financial assets and liabilities are? If not, why not?

• How are assets titled? Will assets acquired during the remarriage be held in joint or separate ownership? Is there a designated beneficiary? What are the implications in the event of a death? Should ownership of these and other assets be changed? Who should inherit family heirlooms?

• What estate planning tools can best be used to meet estate planning objectives and family goals?

• Who will be covered by life insurance? Who will the beneficiary be? What provisions will be made for natural children or stepchildren?

• Who is responsible for children’s health care decisions and expenses? This includes medical insurance and those items not covered by insurance.

• Should a limited power of attorney be established to allow a stepparent to make decisions on behalf of the child, such as in an emergency?

• Will a former spouse receive retirement or other benefits? To be eligible for retirement or other benefits, will the current spouse have to meet certain requirements, such as length of marriage before the benefits apply?

• Should the family set up a budget? How will records be kept and by whom? How will unexpected expenses be handled? When should credit be used?

• Should goals be set? Who should be involved in setting them? What needs of former spouses and natural children living with them need to be taken into account? Under what situations can goals be changed?

• Is child support at the correct level? How do you see it changing in the future?

• How will child support be used? Who participates in decisions involving the use of child support funds? How will expenses for the children be handled?

• How will higher education expenses be met for the children? Was this stated in a child support order?

• Who receives the tax exemptions for the children? Are any of the children’s expenses paid by the noncustodial parent tax-deductible?

• How much money do children get? How often?

• Will children earn income through special jobs around the home or from outside employment? Who monitors whether work around the house is done to the desired standard? For what types of expenses can the income be used?

• Will a marital property (prenuptial) agreement be prepared? If so, what will it include?


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