These days divorce rates are high, between 40 and 50%, and many people are divorced by age 50. So, blended families are very common, with over 16 percent of children in the U.S. living in a blended family. This situation can prove challenging when you’re trying to divvy up your estate among your new spouse, your children, and your stepchildren. As a result, it’s important to try and mitigate a bad situation. How can you do this? Start estate planning now.
What is a blended family?
A blended family, often known as a step-family, refers to families with children from previous marriages including the children from one or both of their previous relationships or extended family members who live in the same home. Given the dynamics of blended families, estate planning sooner than later is important for your peace of mind.
Develop an estate plan
If you’re in the situation where you have a blended family (and even if you’re not), it’s never a bad idea to work with an attorney to create an estate plan sooner rather than later. By developing an estate plan for exactly how you want your estate to be divided, you can help mitigate a bad situation after your death. The key is to make sure by law the plan can never be changed once you pass away.
Unfortunately, if you don’t have this type of protection in place prior to your death, it’s unlikely that your estate will be divided up in the exact way you wish.
Here’s an example to illustrate this point.
An older, wealthy man married an older woman who didn’t have much money. The man had children from a previous marriage and the woman did not. After his death, the man wanted a certain amount of money to go to his children. But he also wanted his spouse to be able to maintain the type of lifestyle she had with her husband. The man died before his wife, and unfortunately, he didn’t have the appropriate estate plan in place that would carry out his wishes. All of the man’s money went to his wife and his children didn’t receive anything. The way to ensure this situation doesn’t happen is for an estate plan to be in place.
2 key points to consider
First, hire an attorney. This is a critical point for anyone with a significant amount of assets, who has specific wishes for those assets upon their death. That way, the attorney can help you set up tools like life insurance trusts, irrevocable trust, etc. that unlike a will can’t be contested upon your death. And all of your assets will go to the people and places you want.
Second, start planning now! Estate planning is the number one area of financial planning where people procrastinate. And the problem arises when that procrastination leads to the absence of an estate plan after you pass away. So, don’t wait; now’s the time to create your estate plan.
Getting on the same page
Lastly, it’s important to have the hard conversations. Once you create your estate plan, let your children, your spouse, your stepchildren (if there are any), and anyone else know what they’ll get upon your death. You don’t want any surprises that can lead to bad situations. It’s best to hash everything out now and communicate your wishes (and your reasoning) so everyone’s on the same page.
Estate planning is hard for families to begin with, but even more so for blended families. Listen to our podcast to learn more and follow these tips to help ensure you mitigate tough situations for your family after you’re gone. Contact us for help with establishing your estate plan.
