Blended Families Present Estate Planning Challenges
Planning your estate can be complex, and more so if you are part of a blended family, such as one that includes children from prior marriages of you or your spouse. In addition to considering the typical financial ramifications and tax consequences, you must take added measures to ensure you are making adequate legacies for everyone you intend to include. Your goal should be to create an estate plan to ensure your assets are divided fairly and to avoid any potential disputes that could later arise.
If you should die without a will or another method of transferring your assets, state intestacy law determines how your property will be distributed. If you have a blended family, your assets may be divided in a way that does not meet your objectives. For example, step-children are not considered descendants, which means that they will not inherit unless you specifically name them as beneficiaries. Additionally, you might want to allocate more property to your spouse or to your children than would be left them if you pass away intestate.
Here are some essential tools for meeting the challenges of estate planning for blended families:
- Last will and testament — A will is a set of instructions for how your property will be transferred. This lets you set out the legacies you intend for family members who are not legal heirs. You can designate a trustee to manage the assets of beneficiaries who may be minors.
- Trusts — If you have children from a prior relationship, you may find it useful to create a trust leaving certain assets to your spouse for life, with the remainder going to those children upon his or her death. This prevents your spouse from wasting or selling off the assets while he or she holds them.
- Beneficiary designations — Designating beneficiaries for bank accounts, retirement accounts, and investment accounts can allow for the outright distribution of those assets when you pass away. You can also name a trust as the beneficiary of such an account and retain control over when and how the assets are distributed.
- Prenuptial agreements — A prenup can be a strategic estate planning tool and an essential component of a comprehensive estate plan. It can be particularly useful if there is property you wish to leave directly to your children of a prior relationship, with no interest to be left to your soon-to-be spouse.
The key to effective estate planning for blended families is to prevent misunderstandings concerning how your property will pass. Clear and complete planning documents can ward off potential challenges to your will.
Contact Attorney Jeffrey Hall today
Jeffrey P. Hall, PLLC assists clients throughout the Phoenix metropolitan area with developing estate plans that meet their objectives, protect their assets and provide for their loved ones as intended. To schedule a consultation, 480-409-5174 or contact us online.