In our last blog post, we began discussing ways that individuals with blended families can tailor their estate plans to provide for loved ones as they see fit. In our last post, we discussed how individuals who have children from a previous marriage or relationship and are now remarried, can use a prenuptial agreement to ensure that the bulk of one’s estate goes to one’s children.
A trust is another useful estate planning tool that individuals with blended families can use to provide for a currents spouse and children from a previous marriage. Assets left to a trust should be dispersed per an individual’s explicit directives. At times, however, a trustee may be influenced and fail to abide by the terms dictated in a trust. It’s important, therefore, to name someone that is non-bias as a trustee. To shield a trust’s assets from potential legal action from other relatives, it’s also a good idea to include a “no contest provision” in a trust.
Another important, and sometimes overlooked, way to provide for those within a blended family is to be strategic about one’s beneficiary designations. First and foremost, it’s crucial to ensure that an ex-spouse’s name is removed as a beneficiary on any life insurance or retirement accounts. While this action should be taken upon filing for divorce, a surprising number of divorcees forget. An individual is then free to put the names of a current spouse, children or step-children as beneficiaries.
Often, for individuals with blended families, it may be necessary to utilize all three of these estate planning tools. As is often the case, attempting to provide for loved ones in a fair manner can be challenging and is often especially so for those in blended families. It’s wise, therefore to consult with a legal professional.
Source: Westfair Communications, “Column: Blended families need estate planning,” Michael J. Greenberg, Dec. 4, 2015