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Estate Planning for Your Blended Family

Estate Planning for Your Blended Family

There comes a day where you may be unable to make decisions for yourself, and while the thought of it is something you would rather avoid. Unfortunately, death is something that affects every person and every family at some point. With this in mind, it is important for parents to always realise the critical role that proper estate planning plays. Estate planning can help to ensure your spouse is looked after when you are gone and ensure your kids (and even step-kids) are properly cared for, too.

Estate planning among any family is already a complex process to begin with. In a blended family, this particular factor can become even more complicated. How to write a will with step-children involved is a common question asked by parents who are part of a blended family. What are the proper steps to take and how should estate planning should work when you have a blended family?

STEP 1: Listing Family Members That Need To Be Named In The Will

Before you start setting up your estate plan, it is a good idea to first consider the individuals who will be named in your will. There are a number of factors to consider here. It is best to write these down and compile a list of names. Adding additional details, such as what role each name plays in your will can also be helpful.

You will also need to designate someone who will serve as an agent should you be unable to make decisions for yourself due, for example, to mental incapacity. In some countries, this can also be referred to as a Lasting Power of Attorney. This agent will also be responsible for implementing your will and estate plan at the time of your death, in this case also taking the role of the will Executor. Take some time and do research on the options for agents to find one that you feel you can trust.

In addition to an agent, you have to list the names of family members who will receive possessions and/or assets in the event of your passing. This will generally include your current spouse, as well as children.

You can also decide to look at options to include any step-children in your will. If you have a step-child, then your family is generally considered a “blended family”. In these scenarios, your will is likely to include additional names, apart from your biological children and your spouse.

STEP 2: Determine the Division of Assets, Amounts, And Possessions

Once you know who will be included in your will, it is time to take inventory of your current assets and possessions. When you pass away, all your belongings will be divided among the individuals in your will. It is up to you to decide how the division should work – you are responsible for stipulating what every name on that list will receive.

When it comes to estate planning, it is a good idea to first determine your wishes. How much money do you wish to leave your spouse in the case of your death? In terms of monetary value, many people start with a goal “sum.” This allows them to plan for the future. This could include setting up a savings plan or taking out a life insurance policy.

Assets that you already own need to be stipulated in the will. Make a full list of your current possessions. This could include items such as cars, houses, jewellery, heirlooms and more. When you have a full list available, it is easier to determine which items would be best suited for specific names on your list.

During this process, you can consider more than your spouse and biological children. Many people also include their step-children in the will. This means physical and monetary assets can be divided in such a way to ensure stepchildren are also taken care of in the event of your death.

Estate Planning Techniques for Blended Families

There are a number of trusts that can be utilized to assist with the estate planning process among blended families. Understanding the different options that are available can help you find one that suits your needs most efficiently.

Among the different techniques that exist, a marital trust still remains the most popular option. This provides more peace of mind to you and ensures everyone will be taken care of appropriately. In the case of your death, assets you own will be made available to your spouse as long as they are alive at the time.

Residual funds can also be addressed in a marital trust. The residual funds will only be distributed in the case of the spouse’s death. In such a case, the funds that still remain from the trust are divided between the designated beneficiaries – which can include your biological children. As well as any stepchildren that were part of your family.

Some people opt for an outright ownership technique, but there are some risks involved. While a popular approach for those who prefer not to work with a trust, you do not have full control over how funds and assets will be used. In this particular case, full ownership of all your assets and possessions are carried over to your spouse upon death. You do not have control over how the assets are distributed once your spouse claims ownership. This can still provide a good option for blended families. As the spouse may take the best interest of both your stepchildren and your biological children in mind.

For those who want to divide all assets at the time of death, a Family Trust may be the more appropriate option. In this case, you dedicate specific assets to each person named in your will. In this scenario, your spouse does not get full ownership of everything upon death. There will also not be a single trust that your spouse controls up to their time of death. Instead, multiple “pools” are used within the trust, each dedicated to a specific person named in your will.

Understanding Home Ownership in Estate Planning

Homeownership can help to ensure your spouse continues to have a place to stay should you pass away, but there are a few things to understand in these scenarios too. You would need to consider the type of marriage you have entered into, as well as the method used for buying the house.

Joint With Rights of Survivorship is a common structure used when a couple buys a house. In such a scenario, ownership of the house is transferred in full to your spouse upon your death. This ensures your spouse can continue to live in and own the home.

Should you have bought the house in such a way that you are the only one listed as the owner, then things can be a bit more complicated. Without taking appropriate action, the house may not be available to your spouse to stay in following your death.

It is possible to change the ownership at any time. You can choose to change the ownership to a Joint With Rights Of Survivorship, which can offer you more peace of mind.

Communicating About Estate Planning in a Blended Family

Death comes at unexpected times, which is why communicating about events in such a scenario is important. Unfortunately, many people fail to realize the importance of open communication about this topic with their families. Among blended families, communication becomes critical to ensure every person knows what will happen on your passing. And to provide them with certainty that they are important to you.

Be sure to discuss your decisions around estate planning with your spouse and (perhaps older) children, and why not with your step-children as well? Including everyone in the discussion is important. As you do not want to end up hurting their feelings or leading to unexpected surprises once your will is being read to your family.

When your family knows what to expect, as well as what would be expected of them, then things will usually be done without as many obstacles. The transition of any assets or possessions you leave behind will happen smoothly. As the family members already know what will be allotted to them.

Considering the Help of an Agent

Estate planning is definitely a complicated topic and becomes even more so among blended families. With this in mind, there are times when speaking to a professional with experience in the development of wills and estate plans can be helpful.

When you decide to obtain help from a professional, be sure to do some research. Find out which agents in your area are professional and have the appropriate qualifications. The individual should be highly experienced in multiple aspects of the law – as a will is a legal matter. Additionally, the professional should also have experience in financial subjects. Planning a will takes skills from multiple areas. To ensure assets and possessions are appropriately divided among those who are named in your will.

An interview with each potential agent in your area is a good idea, too. Ask about the pricing for their consultations, seek testimonials from others. And don’t be afraid to see proof of their qualifications.

Conclusion

A will and estate planning are important parts of life, not to mention end of life. These documents help to ensure your assets are divided in the way you see fit the day you are no longer with your family. Among blended families, understanding how to develop an estate plan can be difficult. Estate planning with stepchildren requires a more complex will than the standard options. But with the right advice and strategy from the start. You can ensure the overall efficacy should something happen to you.

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