Blended families are becoming more commonplace, and these households have many unique issues to consider when planning for their future.
Estate planning can be a sensitive topic for blended families, especially considering how to pass down assets and money.
Having a plan can help avoid a dispute over your finances after you die. It can also prevent conflict between family members.
Remember to Update Your Will
Regardless of how long you have been preparing your estate or how recently you started, you should always ensure your will is current. Whether it is due to a change in marital status, state laws, or your health, there are many reasons why reviewing and updating your will is essential.
Changing your marital status is probably the most common reason for updating your will. If you are married to someone else, your assets are often distributed according to your new spouse’s wishes rather than your own.
For blended families, this can cause serious problems.
Another good reason to update your will is when there are changes in the designations of fiduciaries, like the executor of your will or successor trustee of a revocable trust. Eventually, the best choice for your family may be a different one.
If your relationship has changed, you can add or remove beneficiaries from prior relationships, such as children and stepchildren. It will assist in ensuring that your requests are respected. What blended families should know about estate planning is that creating and renewing your will is essential.
Talk to Your Attorney About Trusts
When you sit down with an attorney about estate planning, they will explain the different types of trusts available to you and what might be best for your situation. These trusts may help you protect assets during your lifetime and after death.
Trusts can also allow you to control what happens to your money and property when you can no longer manage it. For example, if you have an elderly loved one that requires care, a trust allows you to set up rules and conditions that govern how they receive the money in your estate.
A good trustee is essential to the success of a trust, and it is often best to work with someone you can rely on for their expertise and professionalism. Whether you choose an individual or a corporate trustee, they can ensure that your trust is governed by your instructions and provides the kind of protection you seek.
Depending on what you want your trust to do, it can be more complex and expensive to draft than a will, but it can save your family a lot of time and money during the probate process. In addition, it is usually much more difficult for your heirs to challenge the terms of your trust.
Make Sure Your Will reflects your current situation
When you create a will, it is essential to remember that your problem can change. Changing relationships, moving, or the value of your assets can affect what you want to leave to your loved ones. If you want to make sure your estate plan remains up-to-date, it is essential to make any updates yourself or consult a lawyer.
Creating a will is one of the essential tasks in your estate planning process. It is a legal document that lists your wishes about whom you want to leave your assets to, your preferences about how you would like to be buried and cremated, and other details.
Many people assume that a will is something they can do on their own without the help of an attorney. However, you may need to consult an attorney for help if you have children or significant property.
If you are entering into a blended family, it is crucial to have an estate plan that will ensure your property goes to your spouse according to your state’s laws after death. If you are careless, your new spouse and their heirs will inherit your entire property.
The estate planner you choose should be able to work with your current family structure and provide you with an estate plan that protects the interests of your loved ones. They must understand how your existing relationship and finances affect how you plan for the future. They should be sensitive to possible conflicts between you and your family members.
Get a Life Insurance Policy
If you are in a blended family, your estate planning needs may differ from those of a single person. It is because blended families often have more complicated financial and family dynamics. Protecting your assets with your financial advisor’s help can ensure your blended family does not suffer financially or emotionally when you pass away.
One way that your advisor can help you protect your family is with a life insurance policy. A life insurance policy is a contract between you and an insurer paying money to your designated beneficiaries upon death.
Depending on the type of life insurance you have, it could be used to pay your family a lump-sum amount, or it might be used for other expenses like funeral costs or college tuition. Receiving a payout early if you are diagnosed with a terminal illness is possible.
Another way to protect your family is with trust. A trust is an asset management tool allowing you to designate how you want your estate distributed to your surviving spouse, children, and loved ones.
If you have a blended family, it is essential to work with your financial advisor to set up an estate plan that will allow you to distribute your wealth in the most tax-efficient manner possible. It can include a life insurance policy in your estate plan to reduce your estate taxes and a trust that can hold assets and provide funds for specific beneficiaries.