Blended Families Estate Planning

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“A blended family is excellent, but how do you ensure all the members are cared for in an emergency? Estate planning in a blended family protects every child, both biologically and through marriage. It will involve choosing guardians, choosing an executor, and planning each inheritance.”

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Blended Families Estate Planning

Creating a concrete estate plan can help avoid probate court and legal problems regarding blended families. The process of Estate Planning may seem complicated, but it is still critical. Talk to your spouse about your plans to get started.

Our qualified real estate attorneys can help you get the proper documents when you and your spouse are ready. Following these steps will help you get started with Blended Families Estate Planning.


How Do You Define A Blended Family?

Married couples with children from previous relationships or marriages can form a blended family. A blended family can include stepchildren, half-siblings, and extended family members living together. Today, over 16 percent of children in the U.S. live in blended families, which is becoming more common.


Do Blended Families Have Different Estate Planning Needs?

Blended family estate planning is usually the same, but there are more people to consider. If you have children from previous marriages, you’ll need to talk to your spouse about how to account for each kid.

Mixed families can find deciding who will protect their children in an emergency challenging. Parents must consider which guardian is most suitable for which child and siblings. Parents planning estates for mixed families must separate assets and finances with extreme caution.

When couples have children from previous marriages, leaving their entire estate to another person can be more complicated. Setting up a trust for blended families may be helpful if one spouse dies before the other. Such measures can prevent future injustices and arguments.


Options for Estate Planning for Blended Families

Blended families face difficulties deciding on inheritance, executor, and fair distribution of assets. The best Estate Planning options for blended families consider each family relationship. Check out some of the most common Estate Planning options for blended families to get started.


Family Trusts:

With this type of Testamentary Trust, assets go into a combined Trust after the first spouse’s death. The advantage is that the surviving parent can decide how they can distribute the assets according to the needs of each child.


Marital Trust

With a Marital Trust, your assets go to your spouse and children after death. This structure allows both spouses to plan for the future, including all the children.


Outright Ownership:

There is no need to set up a Trust to account for the children’s assets in this Estate Planning structure. It is a relatively simple Estate Planning structure, though each spouse will still have to trust their spouse to do the right thing for the children.


Immediate Bequests:

You can leave assets directly to your children in your Will. This might be a sensitive topic to talk about with your spouse. However, wanting your children to inherit items now could be better.


Do You Have A Blended Family? Probate Can Be A Hassle If You Don’t Plan For It.

As a first step, let’s examine the worst-case scenario: no plan at all. If a person who has died passes and dies without having a clear plan for their estate, or if their goal is not current, the estate could be tossed into the probate court.

In probate court, a judge determines how a deceased person’s assets should be distributed. It’s a lengthy, expensive process that too often results in disputes between family members, particularly within blended families.


The process is like legal limbo.

The probate process is like legal limbo, but when you have a blended family, it can be even worse, perhaps worse than purgatory with knife fights.

It is straightforward to obtain probate in California. You may be in probate court if you don’t plan your estate and create a Trust to transfer your belongings. The argument over that square foot of dirt could last many years.

A $2 million estate can easily spend between $75,000 and $100,000 on probate, to give you an example. It’s money that should go to help your loved ones, but instead, it goes to attorneys and the government. Because probate court fees are fixed by law, you can’t shop around or negotiate them down.

Also, probate will prevent your heirs from inheriting for many years. Probate cases typically last 16 months in California, but many patients have lasted five years. It can take even longer when significant issues such as COVID-19 clog up the court system.


Blended Families: Inheriting Assets Is Complex

We can define the “Characterization of Assets” as categorizing the assets in a blended family estate.

  • Community property: Real or personal assets acquired during a marriage, including debts incurred during the marriage.
  • Separate property: Property obtained before marriage, after separation, or by inheritance or gift during marriage.
  • Commingled assets: There’s a catch. Commingling funds in blended families can be stressful.


Can A Blended Family Use An Old Will, Trust, Or Previous Estate Plan?

Do you have a will from his previous marriage? Does that decide who gets what? Can a blended family resolve this issue?

Wills are instructions to a probate judge about your wishes. They can ensure success if they reflect your wants from your previous marriage. Also, if nothing is updated, there is no assurance.


When You Remarry, Is Making A New Estate Plan A Good Idea?

If you divorce or remarry, you should always revise your Estate Plan, especially if you have children. Doing this ensures your children are cared for and your wishes are followed, especially regarding healthcare and beneficiaries. Sometimes, you may need to revise documents made with a former spouse, and changing your Estate Plan is the best method.


Typical wills for blended families

A will is very important, especially if you’re part of a blended or mixed family. A blended family is one in which either or both partners have children from previous relationships. Planning your estate now will ensure that you provide for all of your intended beneficiaries when you pass away and minimize the possibility of conflict in the family.

Personal assets can fluctuate year-to-year as the dynamics of families change. A successful estate plan can be achieved by identifying potential issues within each family unit and examining solutions.

It is important to talk about your objectives and circumstances with your lawyer to have your wishes adequately reflected in your will and other estate planning documentation. It is essential to review these documents regularly to reflect changing circumstances.


Best Tips for a Successful Blended Family Estate Plan

It is far more challenging to navigate the emotional issues surrounding blended families, not just because of the financial problems. Maintaining family harmony while planning your estate is possible with these estate planning tips for blended families.


Best Tips for a Successful Blended Family Estate Plan


Keep your estate documents up-to-date.

To update your estate plan, you should update your documents to reflect your new family status. This includes changing beneficiaries on RRSPs, insurance, and workplace pensions. When people enter into a new relationship or dissolve a previous marriage, one of the most common mistakes they make is to update their Will.

It is common for people to need to be aware that marriage revokes a will in most provinces. If I sign the marriage certificate, it won’t work if I will leave everything to my two children from my previous relationship.” More than half of Canadian adults don’t have a valid will, potentially causing conflict between heirs.

Updating beneficiaries after separation is essential. If a spouse keeps the former spouse from retirement accounts and insurance policies, problems can occur. Reviewing these documents every few years is the best way to prevent that from happening.

Your beneficiaries in an insurance plan will only know about it if you change it. To ensure your wishes come true, you must carefully consider who will serve as executor of your Will.

When selecting an executor, they must be trustworthy, reliable, and knowledgeable about legal, tax, and administrative matters. This applies to both family members and non-family members. If family relationships deteriorate, it might be a good idea to appoint an executor who is not a relative, such as a corporate executor.


Can’t ignore the prenuptial agreements

Prenuptial agreements and marriage contracts can be valuable tools, even though many people view them as love killers. You need the chance to negotiate and be sure to protect yourself and the other person seeking protection. Entrepreneurs, especially those with children from previous marriages, can benefit significantly from this contract.

The prenuptial agreement needs to be ironclad. Without a valid will, one spouse’s contract may not impact the distribution of assets.

The prenup process is based on mediation and involves lots of communication. It aims to be fair for both parties, not just the wealthier one. Instead of seeing it as just a legal process, it helps the couple communicate better before marriage.


Trust may be a good idea.

With trust structures, remarried couples can distribute their assets more efficiently. Remarried couples may use trust structures like this: The surviving spouse creates a living trust and names themselves trustees during the couple’s lifetime. Children inherit the remaining trust (capital) when the spouse passes away.

Even if your spouse arranges a regular income for the kids, they still receive the money later. Trust tax advantages were primarily removed from the Conservative government’s last budget.

Despite this, trusts remain an effective way to solidify a particular outcome, which is one of the main reasons why trusts might apply. You can customize trust structures to treat all children equally or favor bloodline children based on preferences.


Dialoguing meaningfully

To keep your blended family running smoothly, ensure everyone supports communicating with each other. Writing a new will and updating your beneficiaries by no means guarantees success.

To achieve a common ground when making decisions about retirement, vacation properties, or inheritance, all parties need an open, honest, and consistent dialogue.


The advantages of blended family

The following are the advantages of a blended family :

More support and love –

Blended families are a source of support and love since members can lean upon each other in difficult times and share joys when times are good.

Diversity and Tolerance-

A blended family’s mix of cultures and traditions fosters tolerance and diversity, allowing members to learn how to value differences.

Enhances interpersonal skills-

Regular interaction with different individuals leads to better communication and understanding.

Learning different parenting styles-

Blended family members are exposed to different parenting styles, which can provide a variety of perspectives and a chance to learn.

New sibling relationships-

Finally, blended families offer the opportunity to create bonds that last a lifetime.


Blended Family Estate Planning FAQs


Can we support my surviving partner while ensuring our children receive the assets we leave them?

As explained above, a protective trust allows you to provide your spouse with income. In this case, you keep your spouse’s assets (such as your shares) in confidence to make them available to them.

When your spouse dies, the trust pays your spouse a pension during their lifetime, and the remainder goes to your children. If you pass away, a life insurance policy can give your partner or children a lump sum.

Alternatively, you can establish a Small APRA Fund (SAF) with your superannuation. APRA distributes your spouse’s superannuation death benefit as a pension for the rest of their life. It is a self-managed super fund managed by a professional trustee (APRA).


Testamentary trusts: what are they?

Testamentary trusts are trusts made by a Will, which comes into effect upon your death. They can function as a way to protect assets from creditors, set conditions for beneficiaries, and provide tax benefits.

This plan is suitable for blended families. It covers your current partner and children from a previous marriage. A Financial Planner can advise you on which method is best for you.


When I die, how can I ensure my assets go to my children, not my stepchildren?

If you want only your children to get your stuff, you usually give it to your partner first. Then, when your partner dies, your stuff goes to their children.

Your surviving spouse might change their Will, leaving everything to their children. So, they have to wait until their step-parent passes to inherit. Rather than giving your children a gift later, you can give them one now.

This might include changing your joint tenant status to common tenants to leave your share to your children.


Does a former partner have to inherit my assets?

You are not required to do so by law. If you named your ex-partner as a beneficiary in your Will before you separate, they will continue to be a beneficiary until you formally end your relationship.

If you do not have a will and do not formally divorce, your ex-partner may inherit everything you own, including your superannuation. If your ex-spouse thinks you didn’t provide for them enough, they can claim your estate.


Bottom Line

Estate planning blended families can be rewarding and exciting, but ensuring legal protection for all family members is imperative. When Estate Planning for blended families, parents must follow the correct procedures.

Blended families are unique, and Estate Plans are no different. Parents should take care when selecting guardians and dividing assets accordingly. Contact us today to discuss the best options for you and your family. If you have any questions we didn’t answer, please get in touch with our team.

Hedy Ghavidel

HEDY GHAVIDEL Managing Attorney  Roseville Office  1-866-471-6981  Bio...

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