Divorced, remarried or widowed? Your estate plan needs extra attention.
Chances are, you or someone you know is part of a blended family. Once uncommon, fully 42 percent of adults now have some kind of step-relationship, according to Pew Research.
That’s 95.5 million people.
For the millions of divorced, widowed, and remarried Americans out there, estate planning is extra tricky.
In a blended family situation, there are more opportunities to get it wrong, and the stakes are often higher; it is absolutely critical that you ensure your assets are distributed to a current spouse and not an ex, AND that your children and stepchildren are treated according to your wishes.
Additionally, spouses—current, former or both—may not see eye-to-eye on key decisions. Who takes care of the kids if one parent dies—the surviving spouse or the natural parent? Which assets belong to which spouse?
Editor’s Note: Safeguard your wealth from wolves in sheep’s clothing…
Working through these details can not only avoid future estate planning hassles but also help maintain healthy relationships between all parties involved. To get started, I have given you a list of questions to work with during your initial estate-planning process:
- What do you want to happen when you die?
- Who do you want to make decisions for you, if you can’t make them for yourself?
- Who will provide for your kids?
- Who will take over as guardian for any minors when you die—the surviving spouse or the natural parent? Do the kids get a say?
- What are you going to do for your surviving spouse?
- How do you want to provide for them?
- Do you want to give your surviving spouse broad decision-making authority, or would you prefer to limit it?
- Do you and your present and/or former spouse have shared objectives?
- Will you need two separate attorneys to handle your plans?
- How willing are you to be in the planning conversation with a past and/or present spouse and an attorney?
- Do you live in a separate or community property state?
- In a community property state, both spouses are typically considered equal owners of all marital property.
- In a separate property state, if your name appears on an asset (e.g., a home mortgage) you are considered the owner; however, your spouse still has the right to claim a fair and equitable portion of those assets.
When you sit down to think about these matters, keep in mind any wealth or age disparities between yourself and any future or former spouses. If remarrying, do you need a prenuptial agreement? If there’s a big age difference, who’s more likely to die first?
Once you’ve decided what you’d like to see happen, it’s important to work with a lawyer to formalize and structure your plans. Free online services are not sophisticated enough to deal with the complexities of blended family estate planning.
Additionally, it’s important to work with a lawyer who specializes in estate planning and has worked with blended families before.
A good, foundational estate plan can be costly, but it’s a bargain when you consider the benefits. Planning not only gives you peace of mind about what will happen to your assets when you’re gone but also allows you to preserve the peace with loved ones now.
Until next time,
Doug Davenport, J.D.
Douglas Davenport, J.D. is the Former President and Chief Investment Officer for Atlanta Investment Counsel, LLD, an investment advisory firm. He is also a member of the State Bar of Georgia and the Fiduciary Law section of the state bar.