Although blended families are more common than in previous generations, they can create some unique estate planning challenges. Failing to take them into account could result in your children or grandchildren getting nothing from your estate. It could also result in your former spouse receiving funds inside of a 401(k) or the title to your Massachusetts home.
Review your plan after a major life event
It is a good idea to review your estate plan after a major life event such as a marriage or divorce. After getting divorced, you may want to remove your former spouse as a beneficiary on a bank or brokerage account. If you get remarried, you can add your new spouse as a beneficiary to those accounts and other assets that have beneficiary designations applied to them. It may also be a good idea to put assets intended for your children or grandchildren into a trust.
Consider making gifts now
Making gifts while you’re still alive may make it easier to ensure that your kids or other heirs get their inheritance. In addition, it may reduce the value of your estate, which may reduce the amount that you owe to state or federal tax authorities. An irrevocable trust may be an effective vehicle for those who are trying to gift assets prior to their passing.
Everyone’s needs are different
You shouldn’t feel compelled to treat your new spouse’s children the same as your biological children. This may be especially true if your current spouse has children who have gambling problems or other issues that make it difficult to manage money or other property effectively.
Taking the time to properly execute and review your estate plan may make it easier for loved ones to carry out your final wishes after you pass. An estate plan may also be used to appoint a guardian for your kids or to ensure that your affairs are properly managed if you become incapacitated.