As we head into the busy holiday season when we focus on our families and loved ones, take a step back to consider this: do you have everything in place to ensure that your loved ones are cared for in your sudden absence? Planning in advance for incapacity and death is crucial for everyone, but especially for blended families where the concept of “yours, mine and ours” may not be as clear.
For those who are divorced or widowed and remarried, estate planning presents special challenges and more opportunities to get it wrong. You and your spouse may have children from previous relationships as well as children together. You each may have brought property and assets into the current relationship, perhaps subject to a prenuptial agreement – or not. A disparity in wealth or age between you and your spouse may be another source of friction. There may be higher potential for conflict between your surviving spouse and children, or among your step-children, should you become incapacitated or pass away. Fortunately, advanced planning tailored to your unique family situation can address these concerns and promote healthy relationships between all parties involved.
Married couples commonly leave everything to each other with the children poised to inherit after both spouses pass. The issue for blended families is that your surviving spouse, over time, may divert your assets away from your intended ultimate beneficiaries, such as your children from a previous relationship. Even your joint children may find themselves disinherited if your surviving spouse remarries, dies, and leaves everything to the new spouse. One way to balance the needs of your surviving spouse and your children is to place some or all of your assets in a trust that provides for your spouse during his or her lifetime and ultimately passes to your children upon his or her death.
An alternative (or additional) planning tool to consider is retirement accounts and life insurance policies. Depending on the relative ages of you and your spouse, your children may have to wait a long time to inherit from your estate. By designating your children as beneficiaries to your retirement and life insurance policies to inherit those assets upon your death, you can alleviate much of the friction that may arise between your surviving spouse and children.
Good communication between you and your spouse is paramount. Start by working through these key questions together:
Who do you want to make decisions for you if you can’t make them for yourself?
Who will act as guardians for your minor children if you die?
How do you want to provide for the surviving spouse if you die?
How do you want to provide for your children if you die?
Once he two of you have decided on your shared goals and objectives, work with an attorney – preferably someone who has experience working with blended families – to structure a plan that’s right for your family. “Do-It-Yourself” online estate plans are not sophisticated enough to address the complexities of blended family estate planning. Invest your time and energy now to establish an estate plan for your own peace of mind and that of your loved ones.