Introduction
Estate planning for blended families is known for being highly complex, and for good reason. It comes with a unique set of numerous complications not found when writing the wills of a traditional family. If you are part of a blended family, a comprehensive estate plan is the best way to protect yourself and the people you love from unnecessary financial worry in the future. This blog post will examine the special considerations to account for when estate planning for blended families, and how to prepare for these hurdles to ensure you have peace of mind moving forward.
Defining a Blended Family
A blended family is defined as a reconstituted unit composed of two adults, each bringing one or more children from a previous relationship into a new marriage. This is a relatively modern concept, one which society has had to grapple with until recently as divorce rates have become higher and as families have become more complicated.
A blended family often consists of two previously divorced adults and children from prior relationships, who come together to form a new nuclear family. The blending of households and stepchildren presents new financial management, decision-making and problem-solving situations. Especially during times of crisis, those individuals within a blended family might face difficulties in understanding each other and managing the emotions.
Financial Implications of Blended Families
Financial implications of blended families are particularly relevant when it comes to estate planning. It goes without saying that estate planning is often difficult enough without the need to also involve stepchildren in the equation. Financial considerations need to be taken into account when it comes to estate planning for blended families, to ensure that all parties are protected. This includes:
Spousal control – In estate planning, it is important to consider who would have control over a deceased spouse’s assets. While traditional families generally provide for the surviving spouse to maintain full discretion, this is not always a guarantee for blended families. This could lead to a situation where an ex-spouse claims a share of a deceased spouse's assets.
Properties – In estate planning, it is important to consider who would have control over a deceased spouse’s properties, especially if the deceased spouse was co-owner. This could lead to a situation where an ex-spouse claims a share of a deceased spouse's properties.
Child Support – In estate planning, it is important to consider child support payments when planning for a blended family. A surviving spouse may have responsibility for the child support payments, if the deceased spouse was financially responsible.
Inheritances – In estate planning, it is important to consider who would be the surviving spouse's inheritance. This could lead to complications if the surviving spouse wanted to provide an inheritance to their stepchildren while also providing an inheritance to their own children.
Estate Planning for Blended Families
When dealing with estate planning for blended families, there are some matters to take into account that unique to blended families. These include:
Trusts – When estate planning for blended families, setting up trusts for the minor children of the deceased is a must. This ensures that no matter the facts and circumstances, the minor children will be financially taken care of. Trusts are a great way to preserve family wealth and protect assets from creditors, divorce and estate taxes.
Leaving step-children out – Estate planning for blended families may include leaving step children out of the estate. There is no denying that some stepchildren may be unable to get along with each other, as such, many people will opt to provide for their own children without providing anything to the children of their spouse. This can be done through the use of trusts and other estate planning documents.
Heirship payments – Estate planning for blended families may include providing the surviving spouse with heirship payments. This is a payment that is given to the surviving spouse after the death of the first spouse, and is meant to protect them in the event of remarriage and any potential conflicts over money.
Planning for future marriages/divorces – Estate planning for blended families may include planning for future marriages and/or divorces of the surviving spouse. This can include setting up special trusts for the surviving spouse to ensure that their children from previous relationships don’t get forgotten in the event of a future divorce.
Conclusion
Estate planning for blended families is much more complicated than traditional estate planning. It is important to understand the possible complications that can arise when dealing with blended families, including spousal control, properties, child support, inheritances, trusts, heirship payments, and planning for future marriages and/or divorces. By properly preparing for these issues, individuals within blended families can ensure that all parties are taken care of and protected. With an experienced estate planning attorney, blended families can be sure their estate plans are set up to protect them and their loved ones.