Tuesday, August 18, 2009

Estate Planning Tip of the Week

What is a Blended Family, and how does a blended family affect estate planning choices?

By blended families, we mean a situation where one or both spouses have children from a prior marriage.  It's important for the estate planner to point out the potential landmines in a blended family situation, and for the married couple to plan accordingly.

For instance, planning for blended families usually calls for a revocable living trust so that the first spouse to die does not inadvertantly disinherit their children from the prior marriage.  If the first spouse to die instead simply passes all of their assets to the surviving spouse through a will, the surviving spouse may later exclude the decedent spouse's children in their estate planning, which is usually not what the deceased spouse would have wanted.  Through a revocable living trust, each spouse can ensure that all of their children will remain beneficiaries of the inheritance.

Other considerations include whether to limit (and to what degree) the surviving spouse's access to the deceased spouse's assets for the surviving spouse's lifetime, who to name as trustee of the various trusts, and how to protect your children's inheritance from the surviving spouse's new romance.

For more information on estate planning for blended families, see How to Avoid Disinheriting Your Children and The Casserole Brigade on the Articles Page.