Estate Planning for Blended Families

 Posted on December 06, 2017 in Estate Planning

One of the greatest things about our country is that we have the freedom to define what family means to us. Some families consist of only one mother or father, others are the classic nuclear family, while still others contain step-parents and stepsiblings, half brothers or sisters, or even adopted members. If you have a large blended family, there are special considerations you should keep in mind when it comes to estate planning.

Remarrying With Children

The number of remarriages has been increasing over the last several decades. In 2013, 40 percent of unions included at least one spouse who had previously been married, and many of these unions involve children. One consideration for large or blended families to think about is how a person’s assets will be distributed in the event that he or she passes away. It is vitally important if you remarry that you change your primary beneficiary from your former spouse as soon as possible. Another common mistake happens when a parent names their new spouse as the primary beneficiary and names their biological children from another marriage as contingent beneficiaries expecting that they will all receive a portion of his or her estate upon death. What instead happens is that the primary beneficiary receives all the assets and becomes free to share or not share them with the children. One possible solution to this is to name multiple primary beneficiaries who each receive a percentage of your estate.

Trusts and Prenuptial Agreements

Prenuptial agreements are especially important for those who remarry. Making decisions about property and assets before getting married will make many financial decisions in the future easier. Make sure that the terms in your prenuptial agreement are in line with your other estate planning documents, including your living will and any powers of attorney. A prenuptial agreement can be helpful but it does not replace a comprehensive estate plan.

Some who are remarrying may also benefit from establishing a “bypass trust.” This type of trust is an irrevocable trust often used to pass assets from parents to children in the event of the second parent's death. It is designed to allow the children to avoid paying estate taxes on the assets in excess of the current estate tax exemption.

Trusted Estate Planning Assistance

If you have a blended family or soon will, it is vital that your estate plan reflect your current wishes. Contact an experienced Lombard estate planning attorney today and get the guidance you need. Call 630-426-0196 for a confidential consultation at A. Traub & Associates.

Sources:

https://www.forbes.com/sites/rbcwealthmanagement/2015/06/23/estate-planning-tips-for-your-blended-family/#7c0ad1401a23

https://www.cnbc.com/2016/10/14/remarrying-update-your-estate-plan.html