The Importance of Estate Planning for Blended Families

It is estimated that more than half of all Americans have either been, or will be included in a blended family during their lifetime. A blended family is a family unit where one or both parents have children from a previous relationship. It can be challenging to navigate the complexities of these different relationships and the death of a spouse can create even more complicated financial and emotional issues. The key to minimizing stress on any family member and their heirs, is a well thought out estate plan that makes it possible to honor your spouse and provide an inheritance that is protected for your own children.

Not only are the financial factors for blended families more complex, but the emotions around those decisions can be even more intensified. It can be difficult navigating your children’s wants and needs, while also finding a way to accommodate your new spouse and their possible children. In order to avoid conflict, it is important to have sometimes difficult discussions about guardianship, long-term goals, finances, and other contractual obligations. You should also re-consider who you want included on certain documents in case of emergency. There should be a plan about the intended amount you want each party to receive, and the financial needs of surviving spouses, young children and other dependents.

Once you have a basic overview of your goals, engaging in a collaborative discussion with your Financial Professional and Estate Planning Attorney can help guide your decision. Some topics that may come up are setting up a trust, appointing trustees, living wills, and powers of attorney. You should also update documents such as bank, brokerage, and retirement accounts as well as life insurance and annuity policies. Having these discussions now will help prevent future issues or miscommunications.

As family dynamics become more complex, so do the intricacies of creating an estate plan. Depending on a family’s individual needs there are different strategies that can be used to create a successful plan. Irrevocable Wills, Irrevocable Life Insurance Trusts (ILIT), and a plethora of other trusts can be customized to your specific needs and wants according to your situation. Pre and Post-Nuptial Agreements are also good ways of defining clear intentions and dividing assets.

Overall, your estate plan reflects your values and ensures your loved ones are taken care of, and can even support causes you are passionate about through charitable gifts. A clear plan prevents family disputes, providing direction and confidence to everyone involved and securing your legacy for the future.