Helping Clients Navigate A Course To A Better Future

How do you adjust your estate plan for a blended family?

Blended families occur when two adults who have children fall in love and get married. It can take quite some time for the family to fully adjust to the new circumstances. Older children, in particular, can sometimes be resistant to the changes that come with a newly blended family.

There are certain legal and financial implications for your new family unit as well. You will typically need to make significant changes to your existing estate plan when you marry someone who already has children and who is not the parent of your children.

You may need to create a trust

Estate planning challenges are common in families where there may be a complicated relationship between the children and the new stepparent, and people often make estate planning mistakes in complicated family situations. A trust can be a way to reduce the risk of a challenge in probate court later, and it can also allow you to create very unique estate plans.

For example, you could grant your new spouse the right to continue living in your family home for the rest of their life. However, the actual ownership of the home could remain with the trust so that it passes to your children. They will have legal authority over the home, although they may not be able to sell it until your spouse dies, remarries or moves out to a home of their own. Trusts are very useful in complicated family situations.

You may need to update your beneficiaries

Whether you set your retirement savings to transfer on death to your former spouse or you named someone outside of your family as the main beneficiary of your life insurance, you may need to make changes regarding the transfer or ownership of certain valuable resources.

Life insurance proceeds and accounts with transfer-on-death designations attached typically require direct revision from the owner, as changes to estate planning documents will not alter the beneficiaries currently named in the documents.

You may need to revisit your living will

Your powers of attorney and advance directives often include instructions that reflect your personal values and your relationships. Now that you have a bigger, more complex family, you may have different wishes for your care or different financial support that you require from your agent in the event of incapacitation. You may also need to change who you named to assume authority to remove any potential conflicts of interest.

Many people planning to marry and create a blended family can also benefit from the creation of a prenuptial agreement that affirms what kind of assets their spouse will receive from their estate and what kind of inheritance they intend to provide for the children in the family. The more thoroughly you discuss these matters ahead of time, the less likely there is to be conflict later.

Updating your estate planning documents as your family changes will protect you and the people you love.