Preparing your estate can be complicated, and if you’re a part of a blended family, estate decisions can be even more complex and nuanced. Blended families take on many forms, typically consisting of couples with children from previous relationships. Here are a few case studies to help illustrate some of the challenges. No matter how awkward or difficult it is to talk to your children and beneficiaries about your money, it’s critical to help properly plan for the future.
Children From Previous Marriages
Simple wills often are structured to leave all assets to the surviving spouse. If your estate strategy relies on this type of will, you could risk overlooking children from previous marriages. Also, while it's unsettling to consider, the surviving spouse can end up changing a will without proper measures put in place.1
When new children join a blended family, estate strategies can get complicated. But with a well-structured approach, you can direct how to distribute your assets.
When One Partner Has Significantly More Assets
While the divorce rate has been trending lower, the number of remarriages (2nd or more marriages) has increased. One person entering into a new marriage may have more assets than their spouse, given that 40% of all new marriages are remarriages for one or both spouses. An estate strategy can help ensure that your assets pass down according to your wishes.2
Traditional Trusts May Not Be Enough
A traditional trust is a good start in blended families, but it may not go far enough. One possible solution is to create three trusts (one for each spouse, in addition to a joint trust) to help address different scenarios.3
Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional familiar with the rules and regulations.
Starting the Process
Blended families are more than common these days. If you’re in that position, it’s important to remember that you can create an estate strategy to address your specific situation. The first step may be an estate document review or to review your beneficiaries. Time and life events can change, and your beneficiary designations may no longer be relevant based on current needs and future goals. Our team is here to help you plan for the future so you can make sure your loved ones are taken care of in their greatest time of need.
- Investopedia.com, April 25, 2021
- OnlineLibrary.Wiley.com, January 5, 2020
- Investopedia.com, November 14, 2021