So many financial issues can rise up after a person dies. Financial decisions are enough headache during a person’s lifetime, and at death such decisions get even more complicated since the person’s surviving family have to make some of these decisions, and there is likely to be conflict of interests. The problems your surviving spouse and kids may face will be even more alarming if either of you enter new relationships later in life, or if you’re in a blended family. Estate planning for blended families is a must if you want your biological kids to inherit and enjoy your assets when you eventually pass away. Our estate planning law firm Paramus, NJ is well-known for helping clients in Paramus and all over New Jersey create an estate plan that best addresses their wishes for life and after-death situations. Make a consultation with us today.
So where do I start?
If you are in a blended family, then you need to:
- Identify your beneficiaries
Your beneficiaries are those who you want to inherit from the estate you’ll be leaving behind.
- Identify fiduciaries
Your fiduciary is a person appointed by you who becomes responsible for making decisions on your behalf and handling your estate affairs when you become incapacitated or deceased. Your fiduciary will be instrumental in the distribution of your assets when you pass away.
Tips for estate planning for blended families
It is better to discuss personally with your estate planning lawyer, but being forearmed with a few tips can help. Here are a few things to consider.
Bequeathing assets to spouse
In bequeathing assets to your spouse, there are three ways by which this can be achieved.
- Marital trust – This is probably the best and most popular mode of asset bequeathal in blended families. By creating a marital trust, you are assured that your assets will be used by your spouse after your death, and that your children and step children will then inherit the assets when your spouse dies. You are the one to dictate how the assets are to be distributed. This guarantees that everyone in your family gets a share of your estate.
- Outright ownership – In this form of bequeathal, no trust or complex estate planning is required. Everything becomes your spouse’s at your death. The downside is that your spouse may decide to cut out your biological children to favor her own. Think about it.
- Family trust – This kind of trust bequeaths assets to your spouse and kids. It ensures that your children share a part of your estate even while your spouse yet lives. It also creates that feeling that your kids are as important to you as your wife, and this is important for blended families.
Naming a trustee
When you create a trust, you must also name a trustee. While you can be the trustee of your own living trust during your lifetime, you must name a successor trustee who will see to it that your estate is well distributed among your named beneficiaries as you’d desire.
Updating your estate plan and beneficiary designation
It is possible you had an estate plan with your previous spouse in which they are a beneficiary. If you go into a new relationship and you do not want your ex to benefit from your estate, then you have to update your estate plan. Note that beneficiary designations overwrite your estate plan. So if the beneficiary of your insurance policy of IRA is your ex, that ex will definitely be the one to receive the insurance proceeds regardless of whether you remove their name from your will, trust or estate plan.
No matter how insignificant or cheap your personal items may look, there is need to assign beneficiaries to each of them. This way, there will be no room for conflict on who gets your jewelry or who gets your Ford. Your wishes are clearly dictated in your estate planning documents.
Communication is key
Communication is key to proper estate planning for blended families. Having open discussions with your children, stepchildren and spouse will create an avenue where everyone airs their view, and they know what to expect in the future, thus eliminating shocks and hurt feelings.
The importance of estate planning for blended families can never be overemphasized. It is expedient you speak with an estate planning attorney for professional advice for your unique family, and help creating the necessary documents. If you live anywhere within New Jersey, visit us at our estate planning law firm Paramus NJ.