Estate Planning for Blended Families – Part One

Estate Planning for Blended Families – Part One

Remarriage is on the rise, particularly among older adults. Approximately 20% of adults in the United States have been married two or more times.

As important as estate planning is for non-blended families, it is imperative for blended families to engage in careful estate planning. Failing to do so can result in detrimental unintended consequences and problems. Smart, thoughtful planning can help avoid such problems by balancing and reconciling potential competing interests.

Let’s start a hypothetical case study so we can begin to explore some important estate planning issues facing blended families. Jay, 65, has children, Jeff and Judy, who are 40 and 35. Years ago, Jay divorced Jeff and Judy’s mother. Jay remarries another divorcee, Bea, 55. Bea has a 20 year old child, Betty.

Jay brought into the marriage a house worth $800K (with no mortgage) and cash, securities and retirement plan funds totaling $200K. He and Bea live in his house. Bea brought into the marriage cash, securities and retirement plan funds totaling $400K.

First, an estate plan cannot be done properly in a vacuum, so Jay and Bea need to answer many important questions before I can help them create an appropriate estate plan, such as those concerning: any premarital agreement they may have, their health, children, income, retirement plans, how long they plan to keep Jay’s house, and how they handle their finances.

Even after knowing the answers to the above questions, many types of plans and choices will be available. One choice would involve Jay and Bea keeping their assets separate and establishing a separate estate plan for each of them (a Living Trust, Will, Power of Attorney and Advance Healthcare Directive). They would each make their own decisions about to whom, how and when their assets will be distributed on their respective deaths. Each of Jay’s and Bea’s Living Trusts may include distributions to his or her children, spouse or a combination thereof; and these distributions might be outright and/or to be held in trust for some period of time.

PART TWO: Rob explains another common, efficient alternative in Estate Planning for Blended Families – Part Two.

This article is intended to provide information of a general nature, and should not be relied upon as legal, tax, financial and/or business advice. Readers should obtain and rely upon specific advice only from their own qualified professional advisors. This communication is not intended or written to be used, for the purpose of: i) avoiding penalties under the Internal Revenue Code; or ii) promoting, marketing, or recommending to another party any matters addressed herein.

ESTATE & TRUST ADMINISTRATION: Need to find an experienced estate & trust administrator in Walnut Creek CA? Contact Robert Silverman at 925-705-4474 for legal advice on a Revocable Living Trust, “Summary” Estate Administration, Trust/Estate Beneficiary Representation and Will & Trust Disputes.

Next Estate Planning for Blended Families – Part Two.

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