Blended families have become extremely common in the United States, with upwards of half of children watching their parents divorce by the time they graduate from high school. It is estimated that three out of every four people who get divorced remarry at some point in time, and about 65% of these unions result in blended families.
The process of estate planning can be very complex depending on the extent of your assets and specifics of your wishes even when you have never divorced and remarried. But when you do have children, go through a divorce, and get married again, your estate plan is going to have to be revised. If you want to be certain that your plan reflects your current situation it is going to be necessary to visit your attorney’s office to make the appropriate adjustments. The tools exist to simplify the matter, it is just a matter of being proactive and putting the correct vehicles in place.
When you remarry and have children from a previous marriage, your primary estate planning concern may involve how your spouse would distribute assets you brought into the marriage should you predecease your partner. If he or she was to remarry those assets could wind up in the estate of this new spouse or bequeathed in some manner that did not serve the interests of your own children.
You can take control of this in a few ways, and one of them is to enter into a prenuptial agreement that delineates personal property and then create a qualified terminable interest trust or QTIP. With this trust your spouse receives the income that is derived from the trust for the rest of his or her life, but you as the grantor decide who assumes ownership of the trust upon his or her death, and this would presumably be your children.
The QTIP is a good solution to a potentially sticky situation, and it can provide a big piece to the puzzle when you are engaged in blended family estate planning.