Estate Planning Considerations for Blended Families
When it comes to family, more is more, however, estate planning for blended families can feel particularly daunting. Blended families are largely defined as any family with children from a previous union. Rest assured, understanding what goes into an Estate Plan, making sense of the differences between wills and trusts, and figuring out what other documents you need is a complicated process for everyone, even traditional families. The following article will help you and your blended family make sense of the specific Estate Planning considerations that apply to you and how to manage them.
You Are Not Alone
Blended families account for 40% of all U.S families.
16% of children live in blended families of some kind
There are 1,300 new blended families formed every single day
2 out of 3 Americans do not have any type of estate planning in place. Because dying without a will, also called dying intestate, leaves your asset distribution up to the applicable state laws, it is highly important for everyone to plan ahead of time and arguably even more so for blended families. The current intestacy laws were designed in the mid-20th century for the typical, traditional American family, and have not been properly updated to account for the evolution of norms and the rise of blended families.
Blended families started becoming more common towards the end of the 20th century and the number of children living in them has remained the same for the past 30 years. Unfortunately, about 75% of blended families feel that there aren’t enough resources for them, and based on the lack of evolution of laws, they are right! While it may still be hard for these types of families to get the proper support they need, understanding your estate planning options and how to best protect your family can help you counteract the lack of blended families-specific resources.
Understanding What Happens If You Die Without a Will in a Blended Family
Intestacy laws were designed for traditional families. In most states, if you and your spouse only have children together, your spouse will inherit most of your estate. If you have children with your spouse and from a previous marriage, it becomes a little more complicated. If you have step-children that you have not adopted, the laws are very clear, they will not inherit anything. This is why estate planning for blended families is particularly important.
Steps to Making Your Estate Plan in a Blended Family
Step 1 - Talk to your spouse or partner
Deciding how to allocate your property and assets once you are no longer here to own them is always a complicated process and, arguably, becomes even more so the more people you add to the equation. Talking to loved ones, especially your spouse or partner about how you collectively want to distribute your assets to your children in common and from previous relationships can be tremendously helpful and provide you with peace of mind that you are making the right decisions, the kind that takes your entire family into consideration.
Step 2 - Learn about the various estate planning options
One main difference between a will and a trust that is particularly applicable to blended families is that a will most likely goes through probate whereas a trust allows you to legally transfer property and assets while avoiding the probate process. This means that, with a trust, especially an irrevocable one, you can make sure that whoever you name as your beneficiary will receive exactly what you decide to leave them with. For more information on the differences between a will and a trust, click here.
Step 3 - Pick your plan
Once you feel comfortable with your understanding of the various options you have, it will be time to select an option to get started. Rest assured, with GoodTrust, you can choose to switch plans at any time at no extra cost to you.
Step 4 - Do your best to be fair
The blended family context is a complex one that needs to take into consideration various types of relationships and make decisions regarding the size of each inheritance, naming an executor, and making sure everything feels fair for all. For instance, you might not want your biological children and your step-children to receive the same shares considering your biological children may only have two parents from whom they will inherit and your step-children may have more. Another example would be, you may want to leave some of your assets to a previous spouse or partner for them to care for your children from said union. Many situations can arise in blended families, for that reason it is important to allow for open communication, and ensure the entirety of your estate plan is clear and comprehensive – be as thorough as possible.
At GoodTrust, we are committed to making Estate Planning clear, simple, and flexible. Our single Estate+ plan allows you to create wills or trusts for your entire family at no extra cost and if you need to change which Estate Plan best suits your needs, you can do so with no additional costs. Get started today and protect the future of yourself, your loved ones, and your blended family, here.