Estate Planning for Blended Families
Blended families have many different configurations but are basically comprised of married couples with children from previous marriages or romantic partnerships. Blended families a requite common and can include stepchildren, half siblings, as well as extended family members who live in the same household. Since blended families vary greatly in structure, they each have their own unique estate planning needs. Addressing these needs may require additional measures to be taken during the planning process that will ensure the married couple’s wishes are carried out exactly how they intend, and no family member is excluded.
There are several estate planning tools available for blended families to create a comprehensive plan that safeguards the estate and includes all family members. Here are some tips that our estate planning attorneys recommend to help you get started:
- Discuss your estate planning goals with your spouse and your family. Make a list of your assets that includes any property, financial assets, and valuable heirlooms and discuss how each item will be incorporated in your estate plan.
- Consider a prenuptial agreement prior to getting remarried and get on the same page from the start. Prenuptial agreements are documents that are executed prior to the marriage taking place. These agreements are entered into by the couple planning to marry and provide instructions for how their assets will be divided not only in the event of a divorce, but also in the event of a spouse’s death. A pre-nuptial agreement can state what is being left to the surviving spouse and that the surviving spouse waives their right to make an election against, or contest, the deceased spouse’s will.
- Review all beneficiary designations on assets such as life insurance and retirement accounts immediately upon remarrying and make any necessary changes to reflect your wishes.
- Wills are also a good place to start, but a simple will may not be enough to fully protect your assets and family members. A will is also a public document that can be read by anyone and provides no privacy. Wills can designate an executor of an estate, name a guardian for minor children, and specify final arrangements. However, wills do not change joint ownership of property or beneficiary designations on life insurance or retirement plans. They also cannot control how and when your assets are distributed. They are often subject to undergoing some costly probate after you pass away. However, wills are often used collaboratively with trusts because trusts offer flexibility and protection where wills fall short. A trust can ensure that your wishes are fully carried out according to your directives.
- Trusts are private documents that are not available for public viewing, so your personal and private matters stay private. Trusts come in many types and offer numerous benefits. A skilled estate planning attorney can determine what type of trust will work best for your family as some even offer certain tax benefits. Trusts also minimize the chance of probate and allow you greater control over how and when your assets are distributed. Unlike wills, which go into effect upon your death, trusts go into effect as soon as they are funded. They can also be reviewed and changed throughout your lifetime. You can use a trust to designate that your assets be used for your spouse’s benefit until their passing, and then ownership of those assets can be transferred to your joint children equally upon your spouse’s death. Trusts offer a myriad of customizable options that make them very suitable in meeting the needs of blended families.
A key estate planning tool that blended families should always take advantage of is a Qualified Terminable Interest Property trust, also known as a QTIP. A QTIP trust is irrevocable and gives the grantor the ability to provide for a surviving spouse through the trust when the grantor passes away while still retaining control of how assets of the trust are distributed when the surviving spouse passes away. The trust is structured in such a way where the surviving spouse will receive the income that is generated by the trust for the rest of their life which can provide the grantor with the peace of mind of knowing that their spouse will continue to be financially cared for, while also feeling confident that the bulk of the estate will pass on to the spouse’s children and other descendants.
- Health care directives should be included in every comprehensive estate plan. This allows you to designate one person to make health care decisions on your behalf should you become incapacitated and unable to make them for yourself. You can name your spouse, biological child, or whoever you wish, but it is best to get this directive into effect as soon as you are able.
Blended families have unique estate planning needs and should partner with an experienced and knowledgeable estate planning attorney who can share all available options that will best address their needs and ensure that everyone will be taken care of. The best way to take care of your family is to create a comprehensive estate plan that clearly states your directives. Doing this will avoid a potentially costly probate process after your passing and prevent tension between family members. Contact BMC Estate Planning to schedule a consultation today and explore your blended family’s estate planning needs with one of our expert legal professionals.
Getting in touch
Borenstein, McConnell & Calpin, P.C. is a Wills & Estate Planning law firm serving Central and Northern New Jersey, as well as New York City. We strive not only to give you a great client experience, but to become your trusted adviser for life. To reach Alec, please send an email to email@example.com.
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