Estate planning might seem straightforward at first glance, but the process can be more complicated than you think depending on your circumstances.
Those who are in a blended family need to pay particularly close attention to how they structure their estate plan, as haphazardly throwing one together or foregoing an estate plan altogether can have disastrous consequences.
In fact, if you’re in a blended family and you’re not careful, your children from another relationship might miss out on the inheritance that you want for them.
How to create an effective estate plan in a blended family
The weakness of a basic estate plan or skipping an estate plan altogether is that your spouse is going to inherit a significant portion of your estate. Although that’s not necessarily a bad thing, without strong estate planning your spouse will be under no obligation to ensure that some of that wealth trickles down to your children from another relationship. In other words, what you leave to your spouse may simply be inherited down her familial line.
So, what can you do to protect your spouse and all your children when you’re estate planning in a blended family? Here are some of your options:
- A remainder trust that leaves assets to your spouse for their lifetime while specifying who will inherit remaining assets after your spouse passes away.
- Name your children as beneficiaries in your life insurance policy.
- Use pay on death provisions so that money goes directly to those who you want to receive money.
- Specifically leave assets to your children in your will.
Be thoughtful in the creation of your estate plan
There’s a lot that goes into the creation of a thorough and effective estate plan. To create the plan that’s right for you and your family. Take the time needed to fully understand your options and how you can utilize them to your benefit.