Wills and Trusts Are Important For Blended Families
Posted on Mar 7, 2012 7:55pm PST
If you are in a second marriage and you or your spouse have children from
a former relationship, it can be vitally important to your family’s
well-being to put an estate plan in place.
Estate planning involves anticipating and planning for what may happen
in the world of “what if”. In the world of “what if”,
all the things that you hope won’t happen, can happen. For example,
in a blended family situation, we can have the two spouses and children
from either spouse’s former relationship. If the traditional fallback
plan of each spouse leaving their estate to the other one and upon the
survivor’s death, the estate going to the children is put in place,
the children from a former relationship can be accidentally cut out of
their inheritance.
The children can be accidentally cut out of their inheritance if for instance,
husband dies and wife inherits the estate. Wife inherits the estate with
the intention of carrying out husband’s wish that upon her death,
his children (her step-children) will receive the inheritance he believes
they will receive when she dies, just as they planned. However, wife remarries.
Now there is a new spouse in the picture and the inheritance for the step-children
can become lost in the real world of moving on and blending assets with
a new spouse.
Husband could have insured that his children would receive the inheritance
he intended and taken care of his wife as well by setting up an estate
plan that included a special type of trust. This trust could have paid
income to the wife to help her meet her living expenses and preserved
the principal for the children to receive upon wife’s death. Husband
could have even set it up so that wife could access some of the principal
if she needed it for specified reasons or in specified amounts. This type
of planning choice takes care of all the family members and proactively
plans for the world of “what if”.
Everyone has a need for an estate plan in order to make sure that their
wishes are communicated and carried out but as illustrated above, this
becomes a vitally important step for members of a blended family.