While heads of blended families may try to avoid discussing estate planning, a lack of planning can result in court supervision of the family’s assets. Even though estate planning can be challenging, blended families face additional challenges because it is important to safeguard current spouses and children from past marriages. Therefore, families must be transparent about estate planning, create trust, and name trustees to prevent problems.
You and your spouse will have to discuss how each child will be cared for, especially if children from past marriages are involved. Choosing a guardian in an emergency is one of the most difficult tasks for blended families. Parents must evaluate sibling relationships and the greatest match for each child. Parents will also need to take great care in dividing up assets and funds when estate planning for mixed families. Estate planning for blended families is a little different from traditional estate planning, but there are still many options for blended families. This article outlines three reasons why estate planning is important for blended families.
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Wills
Various documents can be used for estate planning, including a Will and a Power of Attorney. These documents will designate who should be in charge of your financial and medical affairs in the event of your death. Often, people name their spouse to make these decisions, but this can cause arguments and hurt feelings if things go awry.
A blended family will need to be extra careful in how they divide their assets. Creating trust is a good way to ensure each child gets their fair share. In addition, it can help avoid disputes and unfair treatment. You may also consider a trust to divide the estate between children from previous marriages.
Another option is to create a “sweetheart” will. This type of Will allows you to name the deceased spouse’s children as contingent beneficiaries in your Will. However, it is not advisable for couples who have multiple children. For example, Joe and Molly have three children, but Cindy has two children from a previous relationship.
Trusts
Estate planning for blended families often involves using trusts and wills. These documents are particularly beneficial for blended families. While the process is complex, proper estate planning can ensure that the surviving spouse has a comfortable lifestyle and will leave a legacy to their children from prior relationships. Unfortunately, more than half of all U.S. families are now remarried or recoupled, which can pose new estate planning challenges.
Depending on the circumstances, the primary objective of some couples is to provide for their surviving spouse. These couples may have been married for decades or have a child or two. If this is the case, there may be no need to leave an inheritance to children from a previous relationship.
The types of trusts available are flexible, and each person should consult an attorney before making a final decision. For example, some trusts will provide an income stream to one spouse while the other will receive the remaining assets. Moreover, some trusts are QTIP trusts, which can defer estate taxes.
Protecting each member of the family
Estate planning for blended families can be complex. The first step is ensuring that each family member has adequate protection. You can do this by creating trust. A trust will allow you to leave assets to a surviving spouse and provide them with income. It can also provide assets for children based on their needs.
Estate planning for blended families can be tricky because each family member may have different wishes. It can also lead to conflicts if one parent becomes incapacitated or passes away. For this reason, it is necessary to be thorough when creating an estate plan. In addition, you should consider a guardian for each child and the sibling relationship.
In estate planning for blended families, trusts are often used to protect the assets of each member. For example, the first spouse may leave assets to the surviving spouse, who will receive income and access to the principal. When that spouse dies, the rest of the trust assets will pass to the children from the first marriage. There are also qualified terminable interest property trusts (QTIPs) that can defer estate taxes.
