A happy blended family is one that is blended on several levels: physically, mentally, emotionally and financially. An estate plan can be very helpful with the financial aspect.
A successful plan clearly designates the distribution of the estate. For those with newly blended families, or those who are creating an estate plan for the first time, there are a few key aspects to consider.
Power of attorney
This party handles the administration of the estate. Therefore, estate holders should be sure that the party is someone they trust. In many cases, people designate their spouses. For those who re-marry, it may be wise to select a new power of attorney. Whoever the estate holder selects must meet the requirements and be able to execute the estate plan in accordance with the law. Otherwise, the courts may take over the process.
Along with updating a power of attorney, it may be necessary to modify some beneficiary designations. It is important to note that the beneficiary designations in an estate plan do not carry over to separate policies. Therefore, those with insurance policies, retirement funds and other types of standalone policies should review and alter them as necessary.
Sometimes parents desire to set aside certain assets for their children. A trust is an excellent option to consider. By putting assets in a trust, it separates them from the rest of the estate. This not only helps to keep them from incurring certain estate taxes, but it also protects the assets from becoming marital property and ensures that the children will receive them. There are a few trust types to choose from. It may be beneficial to consult with an attorney to determine the best option for the situation.
These are just a few factors to keep in mind and implement in an estate plan for a blended family. However, all families are unique, so it can be helpful for parties to review the law and estate together, to determine the best choice moving forward.