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Estate Planning for Blended Families
Opinion Sep 02, 2015
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By Alexandra Smyser
Second marriages and blended families present their own issues when it comes to estate planning. You would like to take care of your spouse and your children, and your spouse would like to do the same for you and his children. Letting them work it out after you are gone is a recipe for disaster. Fortunately, estate planning can alleviate most of your concerns, allowing you to freely pursue your second chance at happily ever after.
First, have an honest conversation with your new spouse about your existing finances, goals for the future and how you expect your assets to be distributed. If your children are adults, you may also want to include them in these discussions so that everyone knows what to expect.
The biggest concern in second marriages is ensuring that each spouse’s share of the estate ultimately ends up with his or her desired beneficiary. That is, if each spouse has children from other relationships, those children’s inheritance is protected even if their parent is the first spouse to die. Traditional estate planning distributes an estate to the spouse and then the children. But, after the first spouse dies, the surviving spouse can easily amend the documents to disinherit whomever he or she chooses—including the deceased spouse’s children!
Your Estate Plan will include various documents. Here’s a list and the most important thing to consider for each as a blended family:
TRUSTS: Whether or not you have a separate property trust created before your marriage, you should also establish a joint trust with your spouse that has protections for the children. For example, upon the first of you to die, half of the couple’s assets are placed into an irrevocable trust for the benefit of the surviving spouse. The surviving spouse is able to live off of the income generated by that trust, but the principal is preserved for the children of the deceased spouse.
POWER OF ATTORNEY FOR FINANCIAL AFFAIRS: Make sure that any previous powers of attorney (perhaps naming your previous spouse) are revoked. Execute an updated power of attorney naming your spouse, your children or another trusted individual as your agent.
ADVANCE HEALTH CARE DIRECTIVE: An updated health care directive is always helpful for medical professionals in the event of an emergency. This also gives you a chance to discuss your feelings about your end-of-life care, organ donation and burial arrangements with your new spouse.
BENEFICIARY FORMS: You may have a significant amount of wealth in life insurance policies and your retirement accounts. The beneficiary designations on those assets will control who they are distributed to, not your will or trust. Many people forget to change beneficiaries when they get divorced.
PERSONAL INFORMATION AND CONTACTS: You and your new spouse may still be learning about each other, and that includes details about financial assets. If you have smaller life insurance policies or an old 401(k) plan from a job left long ago, now is the time to share that information and make changes or transfer those accounts.
Moreover, your new spouse may not know all of your family and old friends. Providing names, telephone numbers and email addresses for these people so that they can be notified if something happens to you will help connect your spouse with your past.
Every blended family is different and each presents its own set of challenges, both legal and personal, but a trusted attorney can help guide you through the process.
Alexandra Smyser – Courtesy Photo
Alexandra Smyser is an Associate Attorney at the Law Offices of Donald P Schweitzer in Pasadena, Ca. She handles all areas of Estate Planning including trusts, wills, probates, general and limited conservatorships, and special needs trusts. For more information on estate planning contact Ms. Smyser at (626) 683-8113 or visit http://www.pasadenalawoffice.com.
