Estate planning for a blended family can be more challenging than you might think. In addition to dividing up the marital estate, you also have to consider how to provide for children from a former marriage in the event that you pass away first.
Why is this a separate concern?
If you were to pass away, your share of the marital estate would likely be left to your new spouse. That means that when he or she dies, your estate plan will no longer govern the assets – instead, it will be your spouse’s estate plan and any children you have from a previous marriage are no longer entitled to that estate under the laws of intestacy.
To remedy this, parents of blended families have to take extra precautions to ensure that all the children are well-provided for, whether from the current marriage or not.
A prenuptial agreement for example, can distinguish your separate property from the marital estate. This is important because it ensures that this property will not automatically pass to your spouse upon your death. If you’re already in a blended family and didn’t do a prenup, a post-nuptial agreement will work just as well.
Divide the estate on paper, together with your spouse and then bring the kids in to explain what you’ve done. This ensures there are no surprises down the road as everyone knows what to expect. It also reinforces the family bond to all your children and eliminates the idea of “favorites.”
Choose someone other than the step-parent to be your executor as the children from your previous marriage may not take well to a step-parent doling out your belongings. A neutral party is best and the distribution of your assets will seem more “fair.”
Get creative with your bequests by using a trust. A Living Trust allows you to offer incentives to your heirs for specific accomplishments and it also allows you to structure your property so that all your heirs benefit without just splitting up the assets and moving on. You could for example, divide the income from rental properties you own among your heirs while the trust itself continues to own and maintain the actual properties.
Of course, these are just a few of the ways to avoid family disputes after you’re gone. To learn more about estate planning for blended families, contact our office today.