Estate Planning for a Blended Family
When two families join to create a new family, this new arrangement can create complications for estate planning, especially when the new spouses have children from prior relationships.
Many times, these spouses wish to protect their property for the benefit of these children, which requires certain documents and preparation to ensure that these wishes are carried out following the death of either spouse.
Communication Is Important
The first step is to talk it out with both the new spouse and the children of each spouse. Discuss what the couple’s goals are and how they wish to provide for each other, but also talk about what type of assets they wish to leave to their children and why.
The worst thing a newly married couple with children from a previous marriage can do is to not address these issues upfront. Often, the sooner these discussions happen, the better. Ideally it’s best to discuss before the marriage even happens since certain rights kick in once the parties are married.
Review Prior Estate Plans
It helps to review any estate plans the couple had from prior marriages, if any, including wills, trusts and other beneficiary designations.
If the couple had their prior spouses listed as beneficiaries on retirement accounts and life insurance proceeds and wish to change those designations, it is recommended that happen quickly.
If something happens and the plan was never changed, sometimes it can be too late, leaving the prior spouse with money that the deceased would have otherwise wanted to go to their children or their new spouse.
Examine Property: Yours, Mine and Ours
The next step that is recommended is to review what property each spouse has and list what is considered separate or joint assets.
Most couples come into a marriage with their own assets. Many couples entering a second marriage wish to keep it that way and hold those assets for their children.
However, depending on how long the couple has been together prior to getting married, they may also wish to designate certain items as joint or ensure that the other spouse gets those items. If that is the case, it is recommended that these wishes be written in an estate plan.
Prenuptial Agreement
Another way individuals contemplating a second marriage protect assets for their children from prior relationships is through a prenuptial agreement.
This agreement, if executed before marriage, lists what assets are separate property of one spouse or community property of both upon divorce or death.
If the spouses later enter into a will, they should be sure to note that a prenuptial agreement does exist and ensure that the two documents work with each other and not against each other.
Account Designations
Another way to properly designate which accounts or properties go to a specific spouse is through account designations.
If a spouse wishes to designate a certain bank account or financial account to a child instead of the new spouse, this child’s name must be listed. They can be listed either as a beneficiary or the person to whom the account will go on a “transfer on death (TOD)” designation.
In addition, the spouse can own an account or item of property as a joint tenant with rights of survivorship with a child instead of the spouse.
Preparing a Will
The best way to dictate what happens to the property of each spouse is through a will. This document determines who gets what, when, where and how.
If modifications are needed later, they can be done through a codicil to the will.
If one spouse had a will prior to marriage, and the changes are minor, such as changing out the name of a former spouse with a new spouse, this can be done through a codicil. If the changes are substantive, a new will is often recommended.
According to Georgia law, if a Will is made before a marriage, it is partially revoked if that Will was not made in contemplation of marriage. This partial revocation allows the spouse to receive what he or she would have received through intestacy laws had the spouse died without a will.
Marital Trust
Some spouses choose to create a marital trust, which can be customized to meet the needs of an otherwise blended family. A marital trust can continue to provide income for the surviving spouse while maintaining and preserving the trust principal for the deceased spouse’s beneficiaries.
If the spouse wants their children from prior relationships to receive their assets while still providing income for whichever spouse survives, a marital trust is often the best way to accomplish this goal.
Contact Brian M. Douglas, LLC today
If you are not sure you need an attorney, you can always come in for a consultation to discuss your situation.
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