Today’s typical family consists of some version of a blended family. Due to divorce or loss of a spouse, many individuals have children from a prior marriage that they consider as part of their estate plan. Estate planning for blended families requires a thoughtful approach that includes the needs of all members of the family.
Blended Families and Wills
Couples may be surprised when they think through what may happen when they pass. Many spouses provide an “I love you” will to their spouse in which they give everything they own to their spouse.
However, if they do this, the surviving spouse will get everything. He or she will be the legal owner of the property. The surviving spouse has no obligation to provide for the deceased spouse’s children from a previous relationship without some additional planning. This means those children can wind up disinherited. If you want your children to receive something upon your passing, you need more than an “I love you” will.
Typical wills for blended families may include specific provisions regarding what type of property will pass to the children of a previous marriage. These specific designations can help avoid confusion.
Wills for blended families often contain a no-contest clause. This clause is designed to prevent beneficiaries from arguing over the share left in the will and from expensive litigation. It declares that if a child or spouse challenges the provisions of the will, that person will forfeit his or her share.
Blended Families and Trusts
One effective blended family estate planning tool is to incorporate a trust. Trusts are legal documents in which one can designate how certain property will be treated during their lifetime and after their death. You may specify that trust funds be used to pay for your health and welfare during your life, then the same for your spouse, and then the same for your children.
Alternatively, you may provide for periodic distributions to your children or for distributions at certain ages.
Trusts provide greater flexibility because they allow you to manage assets and income that generates from them, according to your specific instructions. Some types of trusts that you may discuss with your estate planning attorney include:
- Revocable Trusts – This type of trust allows you access and control over the trust assets during your lifetime. You can direct who receives the trust assets and change the trust provisions.
- Marital Trusts – Marital trusts can provide for an unlimited amount of transfer from one spouse to another to help avoid estate planning taxes. They often allow a person to provide income for a second spouse for life while also ensuring the children of the decedent will receive an inheritance upon the passing of the second spouse.
- Life Insurance Trusts – This trust avoids life insurance being part of the grantor’s estate.
Golightly Mulligan & Morgan makes estate planning understandable and approachable. We can work with you to ensure your loved ones and property are protected.