Blending families can beautify life and make it a lovely journey once again. But a myriad of estate planning issues can spring up in the unfortunate event of divorce, incapacitation, or death.
The good news? This article highlights how you can plan your estate and make robust changes upon divorce.
What Is Your Best Choice for Estate Planning for a Blended Family?
No two blended families are ever the same. Your option needs to consider each family relationship and iron out issues related to executor naming, inheritance, and general fairness. Here are some of the best paths you can cherry-pick from:
1. Family trust
It’s a testamentary trust where assets pass to a common trust upon the first spouse’s death. That way, the living parent can fairly distribute the property according to each offspring’s needs.
2. Marital trusts
This structure transfers your assets to your surviving spouse while designating residual property for your descendants once the spouse passes on. The structure includes all blended children.
3. Outright ownership
Outright ownership transfers all property to surviving spouse without involving any trust for offspring. While it’s the easiest route, ensure you trust your spouse to exercise fair allocation.
4. Immediate bequests
Here, you don’t go the Trusts route- every offspring in your Will receives assets directly. Convince your spouse that it’s your best choice to avoid conflicts.
If You Divorce, What Changes can You Make during the Process?
Suppose you pass on or become incapacitated before finalizing the divorce. The last thing you want is the ex-spouse taking all your assets and leaving nothing to your children. So it’s prudent to create or change several vital documents:
1. Powers of attorney
Filing for divorce takes the uniform power of attorney away from your spouse. But someone should be there to take care of the finances, medical, and legal issues in case you die or get incapacitated./p>
2. Advanced directive (Living Will)
What are your medical wishes should you fail to communicate due to incapacitation? This document will communicate your wishes to your loved ones and medical care professionals.
A will prevents your ex from controlling assets meant for your children and other beneficiaries. So draft one if you don’t have it.
If the Will, Living Will, and Power of Attorneys contain your ex’s name, you may want to compile new documents during or after the divorce.
What Changes can You Make after Finalizing Divorce
The divorce process is now done and dusted. But it’s crucial to make extra modifications to ensure proper estate planning. Here are some of the changes:
1. Retirement accounts
The law views retirement money accumulated during a legal marriage as community property. You negotiate with your spouse how to split these and other assets.
After a divorce decree, you have to change the individual retirement accounts (such as 401 (k) and IRA) — the adjustment doesn’t happen automatically upon divorce.
2. Revocable trusts
Your ex will automatically cease being a trustee of the Living Will upon divorce. That means you need to name a new one. Regarding Irrevocable Will, it’s wise to talk to your lawyer to sort out things.
3. Life insurance
You can negotiate a life insurance policy with your spouse during or after a divorce. Upon divorce, your ex will automatically cease being a beneficiary unless otherwise stated in the policy. So if you want them or minor children to remain beneficiaries even after divorce, you must express it.
Contact Us to Plan Your Estate
You now understand how to navigate through the estate planning challenges that come with blended families. But your best bet is to engage the services of an estate planning lawyer who will guide you through the journey.
At Petrelli Previtera, we strive to help you plan your estate so that surprises don’t throw you or your loved ones into confusion. Call 866-465-5395 orcontact us online to discover our award-winning family law offerings.