4 Challenges Of Estate Planning For Blended Families
Families come in all shapes and sizes – but some are more difficult to navigate. With the rising divorce statistics, it’s no surprise that blended families are becoming more common. Estate planning for this type of family is crucial to avoid complications after one spouse passes.
Organizing anything with a blended family can be difficult – everyone can have different priorities and values. Planning an estate for your blended family is especially difficult but can be incredibly beneficial to those you leave behind if done correctly.
This article looks at the challenges of planning estates for blended families and how to navigate the complex process. The information included is for educational purposes and is not advice. If this applies to your situation, contact J Mishkin Law today.
1. Not Understanding The Importance Of A Will
Creating a will for those left behind is essential for most Americans, but it is especially important for blended families. Over 40% of Americans don’t find a will necessary enough to create and instead focus on other issues in their lives. While this is fine for a while, if you pass without a will, there is no guaranteed allocation of assets and whatever happens after passing is out of you and your family’s control.
Making plans for your death is never easy, but it is necessary to ensure you protect everyone in your family, not just the living spouse. We believe we have all the time in the world to plan out our assets for after death, but it doesn’t always work out like that.
Drafting a will as early as possible is the best way to combat this; make sure to continue updating and editing it as you continue throughout your life. Utilizing an advisor can take the burden off your shoulders and make the process easier to create a comprehensive document that covers all your bases.
2. Forgetting To Update Documents Regularly
Having estate documents is a great start. Unfortunately, estate documents need to be updated regularly. Each time there is a significant life event, you’ve become a grandparent, you got remarried, etc., you need to make sure your documents reflect this change and are up to date.
This is especially important for blended families as there is a higher chance of assets being distributed unevenly or excluding whole members from inheritance. It’s recommended that you review your estate annually to avoid using an outdated will. These documents provide the road map to your asset and inheritance distribution – the last thing you want is for your wish not to be fulfilled because of an old estate that doesn’t reflect your values.
3. Uneven Playing Ground – Asset Protection
While adding a prenuptial agreement for your new spouse to sign may take some of the romance and joy out of the event, it’s an important protection layer when working with an uneven income or asset distribution, not only in the risk of divorce but to protect your children in the case of your passing.
Without a prenup, your children and spouse are more likely to contest asset distribution at a court level. Contact J Mishkin Law today to review and confirm your plan if you’re looking to add a prenup to your estate documents.
4. The Risk Of Inheritance Hoarding
Grief can cloud judgment, especially when dividing assets between family members. It’s easy to fall into the trap of appointing a sole beneficiary for your estate. But this commonly leads to inheritance withholding or even disinheritance for those who need support the most.
Living Spouse Withholding Inheritance
The usual arrangement for one spouse passing is to hand the asset control to the surviving spouse. While this is the easy route, it’s easy for your children to be left out of decisions that impact their inheritance. This can lead to children waiting to outlive the surviving spouse to see their inheritance.
This is incredibly risky if children are still minors and create a higher likelihood of neglect and financial dependence. You can avoid this situation by putting aside assets for your children to have control over after you pass. Trusts are the most common assets left for children to provide a guide for when and how your children can access their assets.
Disinheritance: More Common Than You’d Think
If the living spouse remarries and is the sole benefactor of your assets, your children can lose their inheritance. Your will and estate documents need to assure your children are protected after your passing.
Stepparents have no legal obligation to provide for their stepchildren once they are no longer tied to them. If they have sole control of the estate, they can remove the children from the will and estate entirely.
An easy solution to this is what is called a mutual will. These will ensure your property assets are passed to your children instead of the living spouse, giving them some control over assets that they do not have access to. This can prevent the living spouse from passing on assets to a new marriage or their children and ensure the biological children are provided for after you pass.
Protect Your Whole Family With An Estate Plan
Avoiding any of the challenges outlined above requires open and honest communication with your current spouse. To ensure you have covered all your assets and your family is fully protected, you need to consult and review the documents with an expert.
At J Mishkin Law, we have over 20 years of experience in estate planning and can help you structure your assets and will for your passing. To ensure your estate plan for your blended family is up to date and is legal in the eyes of the law, get in contact and we will provide you with the peace of mind you deserve.