Yours…Mine…and Ours – Tips on Successful Estate Planning with Blended Families
July 19, 2016
If you’re remarried, you may face some interesting planning considerations when it comes to completing your estate plan. The planning for blended families can be quite different from the planning you did in your first marriage as there is now yours, mine and ours. The key to successful planning is open communication and a full understanding of each other’s goals.
Here are some tips so that the process goes smoothly:
- Have a frank conversation: It may be difficult, but so critical. You need to determine what your respective goals are with regard to providing for each other, as well as children, whether biological or step.
- Prenuptial or postnuptial agreements: Regardless of net worth, prenuptial (pre-marriage) and postnuptial (during marriage) agreements are wonderful tools for detailing your obligations and wishes of how assets are split in the event of a death or divorce. Click this link to learn more.
- Meet with a qualified estate planning attorney and spell out your wishes in writing: If you simply own all of your assets as joint tenants or name your spouse as primary beneficiary and you die first, these assets will be payable to your surviving spouse. What happens at the second death? The assets will distribute according to your surviving spouse’s wishes, which may or may not include your children. Luckily, there are many planning tools available to make sure you can care for your surviving spouse but yet guarantee that at the second death your assets won’t bypass your own children. A QTIP trust is commonly used to provide for your surviving spouse but will not allow your spouse to control where the balance of the trust assets go after his or her death; you will control that outcome. Or, consider earmarking certain assets (life insurance, for example) to be paid to your children automatically at your death. This can be effective especially if your spouse is considerably younger than you as it won’t require your children to wait for your spouse’s death before receiving a part of their inheritance. This can go a long way in preserving your children’s relationship with their step-parent. And let’s not forget taxes…your attorney will help you assess the impact of gift, estate and income taxes.
A thoughtful plan will consider all points of view – yours, your spouse’s and your respective children. I see marital bliss on the horizon!