Estate Planning for blended families presents unique challenges, but that doesn’t mean you should procrastinate. An estate planning attorney can give you your options, which could include these six considerations:
#1. Get a Will!
A will is a part of almost every estate plan I’ve seen (blended family or not). Even if you end up getting a trust, a will is still going to be a part of your estate plan.
A will may not be enough, though. If you and your spouse create mirror wills, each will leaving everything to each other and then leaving everything to all of the children when spouse dies–that could turn out great. However, the problem is that if Spouse A’s will lists Spouse B as the primary beneficiary, when Spouse A dies, everything goes to Spouse B. Spouse B is under no obligation to give anything to the children. In other words, after Spouse A dies, Spouse B can just change her will. Spouse B could change her will to completely cut out Spouse A’s children.
#2. Consider a Revocable Living Trust that Gives Surviving Spouse Access for Life–But When Spouse Dies, Everything Goes to the Children
This style of Trust is called a “Bypass Trust” or “QTIP Trust.” Here’s the way it works:
You and your spouse put everything you own into a joint trust. When the first spouse dies, the surviving spouse still receives the benefit of the trust assets for the remainder of her life. Then, when the surviving spouse dies, the remaining trust assets are distributed to the children.
This is great because it’s relatively easy to create, it ensures that the surviving spouse has everything she needs for the rest of her life, and it ensures that your children don’t get cut out of the inheritance.
#3. Name A Neutral Trustee (or Trustees)
If you do create Revocable Living Trust scheme suggested above, be careful about who you nominate as trustee. In other words, if you name the surviving spouse as the sole trustee, isn’t that leaving the “fox in the henhouse?”
In other words, after Spouse A dies, Spouse B is supposed to get the benefit of all the trust’s assets for her needs. If she’s the trustee, Spouse B would be in charge of determining what she “needs.” Maybe she “needs” to travel the world with Felipe the cabana boy. Maybe she “needs” to buy all kinds of expensive items.
If you’re not okay with these possibilities, nominate a neutral and experienced trustee. There are even professional trustees.
#4. Plan for Surviving Spouse Remarrying
What if the surviving spouse remarries after Spouse A’s death? Many trusts contain provisions that limit how much access the surviving spouse would get if she remarries after Spouse A’s death.
#5. Leave Assets to Your Biological Children Immediately Upon Death
One really simple way to make sure the surviving spouse can’t disinherit your children: Give your biological children an immediate gift of property at your death. In other words, you can make your surviving spouse the primary beneficiary of the estate plan, but you can give your own biological children an inheritance immediately at your own death “off the top,” so to speak.
This is advantageous because your kids would get the use and enjoyment of the inheritance, without having to wait for the surviving wife to die. Another advantage is that you’re guaranteeing that your biological children will get something of an inheritance after your death.
#6. Don’t Forget About Durable General Power of Attorney and Medical Power of Attorney
If you want to make sure your kids are involved with your care as you age, add them on your durable general power of attorney (often called the “financial power of attorney”), the medical power of attorney, and/or your HIPAA Release Authorization.
No Such Thing As One-Size-Fits-All
Estate planning for your family will be different from any other family, and this is especially true with estate planning for blended families.
The tips and pointers in this article are great, but this list was from a really terrific Forbes Article. Go read that article (and the other great articles on estate planning by Forbes).
To ask a legal question or get legal help from and Texas Estate Planning and Probate lawyer Isaac Shutt, use the online contact form to the right or call (214) 302-8197. If you prefer to meet at the law office in person, the estate planning attorneys will gladly offer a free consultation.
Visit www.ShuttLawFirm.com for more information on estate planning for blended families in Texas, Texas Trust for blended families, Texas Wills for blended families, or any other Texas estate planning question, send Isaac Shutt an email at firstname.lastname@example.org.
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DISCLAIMER: Nothing in this brief article constitutes legal advice. The information provided herein is merely provided in the spirit of education and is believed to be accurate as of the time it was originally prepared, and laws change. If you have a legal question, you should consult a lawyer for your specific legal situation. Further, nothing in this article shall be construed to have started an attorney-client relationship. No such relationship exists until both you and and an attorney at Shutt Law Firm sign an engagement letter.
By Isaac Shutt