Estate planning tips for blended families
With an increase in multiple marriages, blended families have become more and more common. A blended family – where two people marry and bring one or more children from a previous marriage – can make estate planning more complicated as you consider how to divide your estate alongside your spouse.
Revisit your existing estate plan
While you may already have an estate plan from a previous marriage, it can be a good idea to revisit, and potentially change, your plan. Depending on how your plan is structured, you may need to revoke documents made with a former spouse. You will also need to consider your spouse’s children and how they will be affected by your estate plan.
Consider multiple trusts
A trust is a great estate planning tool that can help keep your assets safe for your children and other beneficiaries. However, as a blended family, one trust may not be enough, and you may want to consider multiple trusts to cover all of your bases.
Here’s an example of three three trusts to help ensure that your entire family feels taken care of:
- Spousal trust - Supports the surviving spouse while ensuring beneficiaries of the deceased spouse are taken care of.
- Children’s trust - Covers the children of both spouses and protects their inheritance.
- Survivor's trust - Includes only certain assets (like a primary residence) that are to be controlled by the surviving spouse.
Using these three trusts together you can help take care of your spouse along with your entire blended family, and hopefully avoid any future familial disputes. However, setting up one trust, let alone three, can be complicated. It can help to speak with a financial and/or tax professional before getting started.
What if one spouse has significantly more assets?
In a blended family it’s not uncommon for one spouse to bring significantly more assets to the new marriage. While it can be a sensitive topic, you may be able to solve this with a pre-nuptial or post-nuptial agreement which specifies how the assets that are brought into the marriage, and those that are acquired during the course of the marriage, will be handled in the future.
Power of attorney and other considerations
The power of attorney and health care conversations can often be more complex in blended families. This is because your children from a separate marriage may have their own feelings and opinions regarding these topics. As a result, you may decide to include your children in these decisions, or keep them between you and your spouse. Regardless, be prepared to relay important health care and power of attorney decisions to your entire family.
Create open communication with the entire family
Your estate plan will affect everyone in your blended family. Therefore, you’ll need to have conversations with everyone to ensure they understand any changes to your estate plan and what it could mean for the future. You may want to consider having a family meeting to discuss the details, or, if that’s not possible, have individual conversations with each family member to help them feel included.
Being a part of a blended family can make estate planning more complex, but you can still plan for the future successfully and create an estate plan that is inclusive and respectful of your needs, the needs of your spouse, and your future desires for your children.