Marriages don’t always work out. Whether it’s divorce or death, people deserve a second chance to find their soulmate. However, your second marriage can have important implications for the children you had during the first one. More specifically, you may need to use a different approach when planning your estate to make sure that your children receive what you mean for them to receive after you’re gone.
That’s why we’ve created this guide to estate planning for blended families. Continue reading to learn everything you need to know about how to prepare your estate in a way that will ensure every member of your blended family is taken care of.
The definition of a blended family is very straightforward: it is a family that consists of the two spouses and all of the children they’ve had from previous marriages. This can take a few different shapes, which are worth exploring to solidify our understanding of what a blended family may look like.
As you can imagine, each of these situations presents unique challenges during the estate planning process. For example, you will likely want to leave something to your children from a previous marriage and your child’s children from a previous marriage. However, you may not want to leave anything to children that your child’s spouse had in a previous marriage.
Navigating these challenges is a complex process that requires a professional’s expertise. Below, you’ll find some of the most important factors that you need to keep in mind while planning your estate.
What works for traditional families during the estate planning process doesn’t always work for blended families. There’s no better example of this than the will. Experts recommend that blended families use a trust during the estate planning process instead of a will.
When you create a trust, that entity becomes the legal owner of your assets when you pass away. The trustee (the person who manages the trust) is then responsible for divvying up your assets in the ways that you’ve specified. This ensures that your children from a previous marriage actually receive the assets that you want them to receive.
Wills, on the other hand, leave open the possibility that your children get cut out of your estate after you die. Even if you believe that your spouse will do the right thing and take care of your children from another marriage, there’s no real guarantee of that in a will. It’s better to be safe than sorry and only a trust can provide you with that kind of certainty.
The person that you put in charge of your trust will make the final decisions about how your assets are invested and distributed once you’re gone. That’s why it’s so important that you pick someone who both has experience with managing trusts and who you can count on to carry out your wishes. Asset protection is an incredibly important part of estate planning. Creating a power of attorney trust is the best way to ensure your wealth is protected.
It can be difficult to imagine your spouse remarrying after you're gone. However, it’s absolutely essential that you embrace remarriage estate planning -- even if you seriously doubt that your spouse would actually get married again.
Ultimately, you can never say with certainty what will happen after you're gone. Successful estate planning is about eliminating as many sources of uncertainty as possible. That’s why your trust should have specific directions for what happens in the event that your spouse does decide to get remarried. Including this clause is another important part of both keeping your assets protected and ensuring that they go where you want them to go.
This is especially important for people with spouses who are much younger than them. When you go, you probably want your children to be able to use what you’ve left for them as soon as possible.
You don’t want to create an awkward situation where your children are essential waiting around for their step-parent to die. Of course, this has to be balanced against the interest you have in ensuring that your spouse has what they need while they’re still living.
If you do decide to leave assets directly to your biological children, make sure that you use specific language itemizing what you’re leaving to each of them. The more specificity you can provide, the lower the chance that someone is able to successfully contest your will.
Legal guardianship is defined at the state level and can vary based on where you live. It’s important that you take the time to understand what legal guardianship looks like in your state. Doing so will help you make a better decision about who you’ll select for this position.
Generally speaking, legal guardians are responsible for making your health care decisions when you’re not able to do so. Most states only allow you to pick one person for this role, so it’s important that you choose carefully.
The last thing you want is for in-fighting to occur between your spouse and children while you’re in the hospital and incapacitated. That’s why you should consider selecting as your legal guardian the person in your life who you feel is the fairest and most responsible. That could be your spouse, one of your children or someone else in your life who can act as a neutral third-party between them.
Estate planning for blended families is much more complex than it is for traditional families. As you’ve seen throughout this article, there are many different considerations you need to make throughout this process. Attorneys who specialize in estate planning are the best-equipped to make these complicated decisions and translate your wishes into actionable legal documents. Make sure that you consult with one before you finalize your estate.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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