Estate Planning and Your Blended Family
A 2015 study from the National Center for Marriage and Family Research found that in 26% of all marriages, there were stepchildren. Most remarriages–nearly two-thirds–involved stepchildren. Figures such as these indicate that many individuals need to take their blended families into account when it comes to estate planning.
The Importance of Revising Your Estate Plan
There are a number of reasons it is important to make your estate plan with your blended family in mind or to revise your existing estate plan. Without a revision, some of your assets might go to an ex-spouse. Another issue that could arise is that your children from the prior marriage might not inherit anything. However, these and other errors can be avoided with careful planning.
Your first thought when it comes to estate planning might be about your will. If you have a will that leaves everything to your previous spouse and you revise it to leave everything to your current spouse, you might assume that this is sufficient. The problem is that your current spouse might then pass those assets on to their family instead of your children from a previous marriage.
Even if your new spouse and your children currently get along, there is no guarantee that this will last. There are better ways to address this. You could leave some of your assets to your children from the prior relationship in your will and some to your spouse. Another option might be to create a trust that provides for both your spouse and your children. An estate planning lawyer may be able to walk you through the options that apply to your particular situation.
There may also be family heirlooms that have monetary or sentimental value. You can specify who you want to receive these in your will.
Your Beneficiary Designations
Beneficiary designations are easy to forget about. You fill them out when you open a retirement account or purchase an insurance policy and put them away. It can come as a surprise to realize that they are years out of date when you go back to look at them. It is important as well to understand that you cannot “fix” a beneficiary designation in your will or trust because it overrides those documents. You need to change the beneficiary designation itself.
Most people name their spouse as a beneficiary, but you may want your children to receive these assets. It is important to consider what to do with these assets in the overall context of your estate plan and to make sure that all your loved ones are provided for in the way that you want.
It may be possible to avoid some of these conundrums altogether by giving your children their inheritance as gifts while you are still alive. As long as you keep the gifts under $15,000 per person, you do not have to notify the IRS. An estate planning lawyer may be able to further advise you.
One question to ask yourself is what constitutes “fairness” when it comes to what you leave for your heirs. Some parents may want to leave the same amount of money to each child, but there may be other considerations, such as how financially stable each child is and how responsible they are likely to be with money. A trust can help protect assets.
In addition to your beneficiary designation, be sure to review and, if necessary, update additional documents as well, including any powers of attorney.
There are a number of things to consider when creating an estate plan within a blended family based on your personal circumstances. Working with an attorney may help you avoid errors and may also alert you to potential solutions you may have been unaware of. Contact the Knee Law Firm in Hackensack, New Jersey at 201-996-1200 to discuss your needs and make an appointment.