Blended families are becoming increasingly common today, with 16 percent of children in the United States living in a household with a stepparent, stepsiblings, or half-siblings.
The inherent complexity of these families can make estate planning particularly challenging. Without proper planning, this entire ordeal can cause confusion, hurt feelings, or sometimes even be taken to court after your passing.
Fortunately, there are estate planning strategies that can help you protect your loved ones and ensure that your wishes are honored even after you are gone.
Updating your estate plan
It is vital to revisit and review your estate plan after major life events like divorce, remarriage, or the birth of a child to guarantee that it reflects your current goals.
Some cases may even require you to nullify important documents you have made early in life with a former spouse. Thus, updating your estate plan is crucial to ensuring your loved ones are all taken care of.
Setting up a family or marital trust
Trusts are particularly useful for blended families, especially when it comes to securing the transfer of certain assets to specific people according to your preferences.
Creating a will
Establishing a will becomes significantly challenging in a blended family. Although not immediately apparent, future conflict can still emerge involving your surviving spouses or biological and stepchildren.
To reduce the likelihood of these issues, you may want to consider creating a will to determine who will receive what from your estate.
Using outright ownership
Outright ownership is a simple and straightforward estate planning framework that transfers all assets to your spouse without the involvement of a trust. This structure, however, runs the risk that your assets may be transferred to a divorced spouse or creditors in case of bankruptcy.
Estate planning for a blended family is undoubtedly more complicated, but being as thorough as possible is a good rule of thumb to ensure your wishes are honored.
It may also be wise to take your time to discuss this with your current and former spouses to ensure everyone is on the same page and no one you love gets left behind.