A blended family can be a blessing; however, it requires special care with your estate plan —you want to take care of your spouse and stepchildren, but you don't want to inadvertently cut out your biological children.
Here are some things to consider:
Create or Update Legal Documents
- Powers of Attorney – Make sure your current spouse, or another trusted family member or friend, is in charge of making medical and financial decisions in case you become incapacitated. When a family is blended, it is easy for feelings to be hurt or resentments to build; choose someone who's level-headed and able to get along with all family members. Discussing your intentions with your family in advance helps avoid conflict later.
- Review your will. Often, a will in a blended family is designed to give the surviving spouse the assets upon death, and then, upon the surviving spouse’s death, give the remaining assets to all the children equally. Often widows and widowers decide they want to do something different. Wills can be changed at any time. Trusts can help direct the money to the proper recipients.
- Consider using a trust- A trust can be customized to include all the children without the ability of a surviving spouse to change it later. Trusts are also great tools to specifically gift money for certain uses, like educational expenses, or a home. Funds can be disbursed according to behavior requirements too – like negative drug tests.
- Discuss special family items. Talk about sentimental items with the family. It is not surprising that many conflicts arise over items that are not monetarily significant, but rather are meaningful for personal reasons. Your will can address how special items should be handled.
- Discuss your assets and their distribution. You and your spouse may not have been financial equals when you married. Your new spouse may have moved into your house, but you may want your children, rather than your spouse's children, to get the proceeds should the house be sold. If you brought more assets to the marriage, you may want more to go to your heirs than to your spouse's. At the same time, you may want to provide for your spouse by establishing a trust and specifying that when your spouse passes, the trust is distributed among all the children.
- Check your beneficiaries. Who is the beneficiary of your 401(k) or IRA? Upon death, these assets go directly to the listed beneficiaries, not through probate. So it's important to ensure they are updated.
Ex-spouses, blended families and comingled assets increase the complexity of an estate. It is key to have a well thought out plan that honors your spouse. You also want to consider the long-term consequences of your plans. Let us help you develop a plan that will distribute assets the way you desire.