Estate Planning Tips for Blended Families
Leisl L. Cording, CFP®, CDFA®
Senior Vice President & Financial Advisor
Every family is a little different, and that’s what makes families so beautiful! One common family structure is the blended family, which is a family that includes a couple and their children from previous relationships. And just as there’s no one-size-fits-all family, there’s no one-size-fits-all approach to estate planning. If you have a blended family, it’s important to understand how that affects your estate planning needs. To ensure that all of your loved ones are covered as you intended in the event of your passing, follow these steps.
Verify Your Beneficiaries
A lot happens throughout our lives, from losing a partner to divorce to having biological children or stepchildren. With so many potential changes, it's important to verify your beneficiaries and change your will if necessary. For example, some people with blended families might still have their ex-spouse listed as their primary beneficiary on accounts such as a 401(k).
Verifying that your beneficiaries are correct is essential because when you pass, your assets will be transferred directly to those people without probate. If you mistakenly put a beneficiary on your list, your family might have to jump through legal and financial hoops to make things right.
Be Specific in Your Will
Blended families often have unique interpersonal relationships, and these relationships should be reflected in your will. You may leave your assets to your surviving spouse, but upon their death, can you be sure that all remaining assets will be divided evenly among all the children, including biological and stepchildren? What if tensions run high and your surviving spouse decides to write a new will and shut your side of the family out? We never want to think of possible conflicts, especially with something as important as estate planning, but these questions need to be considered. In addition to including your remaining monetary assets, you may also want to put sentimental items in your will.
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Regulate the Flow of Money
One of the best things about blended families is that they bring together different people with different interests, passions, and goals. While accepting others is a powerful way to bond a family together, you may be faced with someone in your family who needs a bit more control when it comes to inheriting your assets. For example, a child or stepchild may have a gambling problem and head straight to Las Vegas to bet their inheritance on black. In such cases, you should consider setting up a spendthrift trust.
A spendthrift trust limits your beneficiary’s access to assets. Rather than receiving a lump sum, the beneficiary receives funds incrementally. This is great protection against bad spending habits. In addition, with a spendthrift trust, creditors cannot come after an inheritance still held in the trust because it belongs to the trust, not the beneficiary.1
Just as every family is different, every estate plan is different. Setting up your estate plan properly will guarantee that your assets are in good hands when you pass. You must ensure that the desired beneficiaries are inheriting your assets if you have a blended family.
If you’d like help with managing your estate plan, get in touch with us at Weiss, Hale & Zahansky Strategic Wealth Advisors. We act as fiduciary wealth management advisors to help our clients build and pass along wealth to future generations through our Plan Well, Invest Well, Live Well™ process. You can request a complimentary consultation on our website or call us at (860) 928-2341.
Presented by Senior Vice President, Financial Advisor Leisl L. Cording CFP®, CDFA®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084, 860.928.2341. http://www.whzwealth.com These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.
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