The word "family" has many definitions and even more connotations. The term is commonly used to refer to a group of people who share DNA - parents and children, for example. But it can also be used to describe the closeness of friends. Sometimes it describes legal relationships regardless of sentiment. You can probably think of other examples as well.
When it comes to estate planning, it is not a good idea to be vague about your own definition of family. This is because families change all the time due to marriages and divorces, births and deaths, closeness and estrangement. The clearer you can be when drafting an estate plan, the greater likelihood that your estate will be divided according to your wishes.
Here's a question that many people struggle with: do your in-laws count as family? You might be sure about your decision to leave assets to your children and grandchildren, but their spouses can be a trickier matter. What do you do in cases of divorce or remarriage? About 40 percent of U.S. adults now have at least one-step relative, and that's just within their immediate family.
There are also important questions about how to divide your estate among a growing family. Do you leave inheritances just to your children and have them pass it along as they see fit? Or do you specifically name grandchildren in your will, keeping in mind that you might not be around to meet all your future grandkids?
These are tough questions, to be sure. And the answers are probably different for every family. The important thing is to make these decisions carefully; preferably with the help and/or knowledge of your children and other intended heirs. That way, everyone is on board and there is less chance for fighting and resentment later.
Source: Reuters, "YOUR PRACTICE-Who is family when it comes to estate planning?" Beth Pinsker, Oct. 29, 2013