5 Estate Planning Tips for Blended Families

Divorce and remarriage are common. Blended families bring an extra challenge to estate planning for Chicago area residents, and it’s important to have those difficult conversations with loved ones when contemplating another marriage.

Here are five tips to help resolve financial concerns in blended families.

Tip #1: Consider a prenuptial agreement

Chicago area men or women becoming part of a blended family can protect their goals and financial resources by entering into a prenuptial agreement with their new spouse. While a prenup may not be necessary for couples entering a first marriage, for a second marriage or any more after that there are all sorts of complex issues that may make such an agreement not only useful but necessary. Make sure to consider prenups as part of your estate plan.

Before getting hitched, be sure to discuss estate issues and estate planing in general with the new intended spouse. A prenup ensures that both parties enter into the relationship with a clear understanding. This can protect not only the husband and wife, but loved ones as well.

Tip #2: Define accounts

Newly married couples should clarify any ground rules up front regarding “yours,” “mine,” and “ours” in order to avoid confusion. It’s important that each have a good understanding of the new blended family’s finances. Many couples will start out having separate accounts, primarily using them to pay for personal expenses, including those for children from a previous marriage.

When maintaining a joint account for ongoing expenses as a couple, it’s important to discuss how much each spouse is going to contribute monthly – an equal amount or a percentage. Since financial circumstances change due to job loss, business ownership or promotions, couples should revisit this arrangement regularly to ensure that it still meets their needs. Keeping up clear, consistent and frank communication about finances truly helps to prevent misunderstandings.

Tip #3: Keep medical documents current

Who gets to make end-of-life decisions? If wishes aren’t put into writing, loved ones can be left with legal disputes and family fights at one of the most difficult times in their lives.

When beginning a new marriage, husbands and wives should be sure to talk with their new spouse about this issue. Children from a previous marriage may have very different ideas about what should be done in the event of incapacitation than a step or half-sibling. Without specifying those wishes in a living will, also called an advanced healthcare directive, there can be costly legal battles and anguish for loved ones.

Tip #4: Modify the trust and will

The ugliest family disputes that occur after someone passes away are not about money but possessions with sentimental value. Even the smallest item can have a significant emotional value, and squabbles over these belongings can cause rifts that are difficult to heal.

Trusts should be as specific as possible about what each beneficiary is to receive. This will eliminate potential infighting among siblings and between surviving spouses and children from a previous marriage.

If there’s a desire to leave assets to stepchildren, it’s important to include those directives in the trust or will. Stepchildren are not generally considered legal heirs, and they won’t inherit anything without being named in these documents.

Estate plans can also become complex when a chicago area husband or wife wants to provide for his or her surviving spouse and still give the children access to inheritances as soon as possible.

If the husband or wife have children by a previous marriage, a trust can be a good way to protect an inheritance. It can also be used to help ensure that any previous spouses or step-children who were part of that marriage are not inadvertently disinherited by the new relationship.

Without getting those wishes in writing, loved ones are at risk of being unprotected and without financial support unintentionally.

Tip #5: Talk to professionals

Experienced estate planning attorneys in the Chicago area understand the unique challenges facing blended families.

Please contact our office to discuss the use of trusts or other asset protection strategies. We encourage open and honest communication with loved ones about their final goal: a happily blended family that remains a family after the parents have passed.

Finally, marriage should be a time for families to come together and rejoice. Blended families can be strong and supportive environments for everyone. However, a large part of that comes from everyone feeling that they are taken care of when a loved one passes away.

Contact Gary for help thinking through which trusts might provide the right structure for you and your specific circumstances – by phone @ 847.719.1300 or click here to contact via web form.