As you probably already know, divorce is no longer rare and almost a norm for American families. Often after divorces, one or both of the spouses will remarry. In some cases, they marry people who have also been divorced and have children from previous marriages. These new families–consisting of children from past marriages, also known as blended families–are becoming more and more common. Although estate planning is recommended for all types of families when there are significant assets to distribute, it is perhaps most important for blended families.
Every situation is different, but it can sometimes be awkward when dividing resources between your biological children and your spouse’s children from another marriage. It’s best to be clear and open with everyone about how assets will be divided, and to have it all in writing, so that everyone can be on the same page.
In addition, you should take extra care in how assets will be distributed after you die. Though some estate plan arrangements distribute assets first to the spouse and then later to the children, if you have a blended family, you may want to do it differently. It could cause anxiety among your biological children if they are afraid that your spouse will amend the estate plan after you die to distribute the assets to his or her children instead. Like many estate planning concerns, the best way to address this is to plan ahead. Here are a few tips to help you arrange your estate in blended families.
Establish Trusts
Like mentioned, if you leave your spouse completely in control of assets, this may create anxiety in your children and difficult situations later on. It is better to establish trusts, so that your children and your spouse understand how assets will be divided after your death. You might want to establish separate trusts for your children or other chosen beneficiaries. You can make your spouse the beneficiary until they come of age, or you can distribute the trusts directly.
Share Financial Information
When you come from separate marriages, both of you have probably already amassed a fair amount of assets, including IRAs, properties, and other types of investments. It’s a good idea to share information about all your financial investments, so that if something happens to you, your new spouse will be able to track and manage everything.
Check Beneficiary Names
When you enter into a new marriage, you should double check beneficiary names on all your insurance policies and retirement accounts. Some may still be in the name of your former spouse. This is a good opportunity to designate assets to your adult children, or you can make your new spouse the beneficiary.
Plan Ahead
It can be really helpful to get trusts and other arrangements in order before the wedding. This way both spouses can guarantee that their assets will be distributed correctly.
If you need assistance with estate planning, our attorneys can help. Give us a call today to schedule a meeting.
