A blended family is one whereby both spouses come with kids from their previous marriages. The man has his own children, and the wife has hers.
In a blended family, your property cannot automatically go to your spouse’s children when you pass away. And neither can your own children inherit your spouse’s property by default. Only the children born to both partners in the current marriage can inherit property by default. More so, in a state like New York, your spouse has a much greater portion of your estate than the children born in the marriage. And could you trust your spouse 100% with their step-children?
Should your spouse survive you, there is a chance that your own children may not be receiving anything significant. Hence, your estate planning goals for your blended family should be to ensure that your own children are not left out of your estate when you pass away before your spouse.
Get help from an estate planning attorney
Estate planning for blended families is typically more complicated than that of a traditional family. You have to consider if your wishes are realistic and practicable, and whether your assets are sufficient to cater to them. An experienced estate planning lawyer as we have can assist you in making the right plans that will benefit you and ultimately your loved ones.
Estate planning considerations to actualize goals for blended families
1. Marital trust
To ensure your children are not left out of your possessions, you may need to create a marital trust. In fact, it is recommended for blended families as it allows assets to be available for the surviving spouse, while giving clear instructions on how the remaining assets will be disbursed when that spouse dies.
More concisely, you would have a plan that cannot be overridden by your surviving spouse. This is especially good if you fear that your spouse may create an estate plan after your death, willing the entire estate to their own kids but leaving yours out.
2. Family trust
In this kind of trust, you hold assets for your spouse and children. Here, the assets are in a pool, open to all parties; by so doing, your spouse has no right to claim the property or disinherit your children. This structure is effective, but the downside is that complications may arise due to asset use prioritization. Who has more rights to the house? Can they all stay or can one party decide to sell?
Meticulous planning needs to be done to prevent such issues later.
3. Real estate ownership
If you own your home jointly “With Rights of Survivorship” with your spouse, its entirety will go to your spouse when you die. Where the house goes after will be determined by their own estate plan.
If you are not comfortable with that, you can change the home ownership and fund the house into a trust to be used by your spouse and children as you prefer.
4. Making quick asset transfer to your children
Blended families should be handled with care. Your children may feel undervalued if you only leave assets to your spouse without giving them any form of direct support. You can’t expect your surviving spouse to treat them fairly as their own kids. Making an immediate asset transfer to your children at your death will enable them see their worth to you. You would be supporting them without depending on your spouse to do it for you.
5. Selecting a trustee
In selecting a trustee for your marital or family trust, you want to be sure the individual is accepted by all parties. It’s helpful to consider how they will interact as a family to avoid bitterness or conflicts later on.
6. Life insurance and designated beneficiaries
Your life insurance can be a great way to support your child(ren). At your death, the proceeds will immediately go to whoever is named in the insurance, regardless of what your will or trust says. So you want to make sure the beneficiary named in your insurance policy coincides with your present wish. There have been cases where the life insurance of a deceased goes to their ex-spouse because they forgot to update the beneficiary designation.
7. Communication is key
To not put your family into a state of shock when they discover your plans at your death, it’s advisable to communicate openly with them. Discuss with your spouse, children and step-children, and ensure everyone is clear with your intentions.
Talk to an estate planning attorney
Estate planning for blended family is not always straightforward. To ensure you get everything right without costly mistakes, talk to an attorney near you.
Living in New York? Call us to speak with an estate planning attorney near you.