Blended families are no longer limited to television sitcoms. The Pew Research Center reports that 41% of all Americans have at least one step-relative of one kind or another. As many as 1,300 new stepfamilies or blended families are created daily, according to the Stepfamily Foundation. But blending families includes decisions about finances, and that means estate planning decisions, as well.
The Miami (OK) New-Record’s recent article, “4 tips to resolve financial concerns in stepfamilies,” provides some tips and answers for issues within stepfamilies.
1. Align your assets with your plan. A major issue for stepfamilies can be how to split finances into “yours,” “mine” or “ours.” Any combination of accounts can be just fine, but spouses should clarify the rules at the start to avoid confusion. Once you’ve made the decision, however, you’ll need to ensure your assets are titled in a way that reflects your estate planning decisions.
Few people realize that the way they own their assets will determine what happens to that asset after they pass, even if they’ve created an estate plan. Work with your estate planning attorney to ensure your assets are titled correctly. And because financial circumstances change, couples should regularly review their estate plan to make sure their assets and estate plan reflect their current financial and family situation, as well as current laws.
2. Keep documents up-to-date. After remarrying, review the beneficiaries of life insurance, pensions, and other financial accounts. It is also important to create or update any power of attorneys, living will or a healthcare proxy to name a person to make decisions, in case of incapacity. In many cases, such as retirement accounts and insurance policies, your beneficiary designation trumps anything you may state in your estate plan. You’ll want to ensure these are up-to-date and as your financial situation or estate plan changes, you’ll need to review them to ensure they’re still aligned with your estate plan.
3.Modify your estate plan. Inheritance issues can make children and spouses concerned about their financial futures. With that reality, a newly remarried couple should draft or revise an estate plan to address important estate planning issues. We also strongly encourage our clients to hold a Family Care Meeting where they can outline the plan and their wishes to heirs. This helps minimize potential squabbles and gives everyone involved in executing the plan a sense of their responsibilities. Step-children aren’t usually considered your legal heirs, so they may not inherit if you pass away without an estate plan containing specific provisions for them.
4. Talk with your professional team. An experienced estate planning attorney will understand the unique challenges facing blended families. You won’t want to be talking only with an estate planning attorney, however. By including the other professionals you work with, such as insurance professionals, CPAs and financial advisors. Together, you can all ensure your estate plan takes care of your family and that all your assets are aligned with your plan. Discuss what you’ll need to do to ensure all your children are properly protected. Be open to the discussions and to communicating with parents and children to help further the final goal: a happily blended family that remains a family after the parents have passed.
To us at Family Estate Planning Law Group, that’s the whole point of estate planning: to take care of your family by ensuring your estate plan will work the way you intend. For more information, follow the links to find out more about the importance of aligning assets or the Family Care Meeting, or contact us to schedule your consultation today!
Reference: Miami (OK) New-Record (May 20, 2017) “4 tips to resolve financial concerns in stepfamilies”