A lot of people put off estate planning for far too long. In many instances, individuals do this because they think they don’t need anything more complex than a basic will. Others are fine with their assets being distributed in accordance with the state’s intestate succession law.
But if you’re in a blended family, then foregoing an estate plan can prove risky for your assets and your children from a previous relationship.
Why estate planning matters in a blended family
If you forego proper estate planning, then your children from another relationship could end up on the losing end of the inheritance game. This is because once assets are left to your current spouse, absent an estate plan directing otherwise, there’s no requirement that your spouse then leaves those assets to your children from another relationship.
In other words, if you don’t create an estate plan, then your assets might end up flowing down your spouse’s family tree, completely cutting off your other children.
How can you ensure that your children are protected?
Although estate planning in a blended family can be tricky, there are strong strategies that you can use to protect your children and your vision of the future. Here are some tips to help you accomplish that:
- Remainder trust: A remainder trust allows you to designate a beneficiary while also specifying who will inherit the remaining trust assets once the initial beneficiary passes away. Therefore, you can leave assets to your spouse for the rest of their life while leaving the remainder of the trust to your children from another relationship. This is a great way to ensure that all of your loved ones are protected.
- Gifting assets: If you want to provide immediate financial support to your children while cutting out what may appear to be uncertainties in the estate planning process, then you can gift them assets during your lifetime. The IRS allows you to gift thousands of dollars to an individual each year, which means you can efficiently transfer wealth while still being able to observe your loved one enjoy those assets.
- Beneficiary designations: Another way to ensure that your children are taken care of is to name them as beneficiaries on some of your estate planning documents. Remember, you can use as many trusts as you want, and you can customize your will to ensure that your loved ones are protected as you see fit.
- Updating your estate plan: As life changes, so should your estate plan. This includes when you remarry or get divorced. Keep an eye on your estate planning documents to ensure that they’re meeting your needs and aligning with your vision of the future.
- Life insurance: Although you can modify your beneficiary designation to ensure that asset distribution is in accordance with your wishes, you can also use a life insurance policy to help provide for either your spouse or your children. This can provide you with a clear separation of assets with very clear beneficiaries. This also ensures that each of your loved ones will receive financial support from your estate immediately.
Develop the estate plan that’s right for you
An estate plan can be as extensive as you want it to be. But it doesn’t have to be overly complicated. It just needs to suit your needs so that your assets don’t fall into the wrong hands.
Therefore, if you want to ensure that you protect your estate and your loved ones as fully as possible, then you should continue to research what the estate planning process has to offer you.