There are more blended families today than ever before. Estate planning for families where one or both spouses have children from prior marriages requires special considerations. The desire to provide for a current spouse and any mutual children may conflict with the desire to provide for children from a previous marriage.
In a non-blended family (first marriage situation), assets are usually left to a surviving spouse, which in turn leaves assets to the couple’s children. This simplistic form of planning may be inadequate in blended family situations. If you leave assets outright to your surviving spouse, he/she is free to leave those assets to whomever he/she wants. Once a surviving spouse inherits the estate, he/she can exclude stepchildren. On the other hand, if assets are left to children from a prior marriage at the death of the parent, there may not be adequate assets left to provide for the surviving spouse.
There are planning strategies that can be used to protect both spouse and children. Trusts can be established that allow a surviving spouse to benefit from the assets during his/her lifetime but ensures that the remainder will be left to your children when the surviving spouse dies.
In situations where there is a large age difference between husband and wife, the couple must consider whether it is appropriate or desirable to have the children wait until the death of a surviving spouse before inheriting any assets. Life insurance can be an effective tool in these situations. Instead of making children of a prior marriage wait until the death of a step-parent to receive benefits, a parent may decide to designate children from a prior relationship as beneficiaries of a life insurance policy to ensure that the children will receive a certain sum of money when the parent dies.
The couple must work with their estate planning advisors to ensure that their beneficiary designations on retirement plans and life insurance policies are in sync with their overall estate plan.
Estate planning for the blended family involves creating a thoughtful and compassionate structure for the distribution of assets. This can help minimize or eliminate conflict and animosity amongst a surviving spouse and step-children.
For more information please contact Lisa S. Golshani, Attorney at Law, 27240 Turnberry Lane, Suite 200 In Valencia, at 661-362-0770.