05 Nov Estate Planning for Blended Families
Blended families can take various forms.
- Married couples with children from previous marriages.
- Families with children who are in a second marriage and who have children from a previous marriage.
- Families with children whose spouses have children from a previous marriage.
With approximately 50% of American marriages ending in divorce, it is safe to say that blended families are the norm now a days. Without proper estate planning, often times most blended families end up fighting in court. For these families that look more then like the Brady bunch, special care must be taken in planning for their future. Most people want to ensure that they have provided for their spouse’s financial needs once they have passed while simultaneously ensuring that their children from previous relationships also receive an inheritance. However, if they do not plan their estate properly, challenges could arise such as:
- potential for their children to be disinherited,
- delays in the children receiving their inheritance,
- disputes over division and authority or responsibility.
For example, Dan and Marsha create Wills and leave everything to the spouse that survives. They name his two children (from a previous marriage) and her two children (from a previous marriage) as contingent beneficiaries. Dan passes away. Marsha, who is alive, receives his entire estate. Marsha changes her Will to leave everything to her two children, leaving Dan’s children from a previous marriage out in the cold.
There are several estate planning tools that can assist couples when planning their estate, or better yet, protecting their assets. Depending on the family structure and desire of the couple, a custom estate plan should be put in place that will cover various problematic scenarios.