Blended Families and Estate Planning: Special Considerations
When it comes to blended families and estate planning, there are some special things you need to consider.
Most estate planning strategies assume a traditional nuclear family.
As blended families become more common, estate planning strategies continue to evolve. If you are part of a blended family, careful planning is essential. Without it, you could unintentionally disinherit children or leave assets to an ex-spouse.
As more blended families create estate plans, the goal is to avoid these costly mistakes. Below are common issues that often lead to conflict and confusion among surviving loved ones.
Joint tenancy issues
In blended families, it is easy to accidentally disinherit children. This happens more often than people expect. It often occurs when spouses place assets in joint ownership without considering the long-term impact.
Common assets include homes, vehicles, and bank or investment accounts. When these are held in joint tenancy, they pass automatically to the surviving spouse.
After the first spouse dies, the surviving spouse owns those assets. They are not legally required to pass them to the deceased spouse’s children.
IRA and 401K Account issues
Federal law gives a surviving spouse strong rights to retirement accounts. Unless a spousal waiver is signed, the spouse is entitled to 50% of the account. This applies regardless of what the beneficiary designation says.
That’s why it’s critical to update your retirement account beneficiaries after remarriage. Even if you want your new spouse to benefit, you should plan carefully. Once the account transfers, the new owner may be able to name new beneficiaries.
To maintain control, consider using an inherited IRA trust. This approach can help ensure your wishes are carried out after your death.
Increased risk of family conflict
For many blended families, mitigating against the potential of family conflict from children against stepparents is a top priority. No one wants their assets squandered in legal proceedings if conflicts arise between biological and stepchildren after a parent becomes incapacitated or dies.
Review and update all financial accounts, legal and medical directives
Many people do not think about updating their wills and estate plans. It’s a good idea to review both on an annual basis and consider if any major changes have happened. A new marriage is one of those events. The birth of children, the death of someone designated as a medical directive or Power of Attorney. You can never guarantee that everyone in the blended family will be happy with the arrangements you’ve made. But that’s not always the point. More important is that you don’t want to inadvertently shut someone out of an inheritance or give someone everything that you hadn’t planned on giving anything!
Give our office a call to schedule a review of your estate plan or to establish an estate plan for your new blended family.
Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!
