Estate Planning for Blended Families
Blending a family with children from previous relationships creates enriching new family opportunities, but the new blended family can cause some complications. To prevent future confusion or conflict, it is important to develop a thoughtful estate plan that considers all aspects of the situation and addresses expectations.
Inhulsen Law understands the factors that can complicate family circumstances and we work closely with you to anticipate potential areas of concern so you can create the right plan to protect your loved ones.
Why it is So Critical to Prepare a New Estate Plan for a Blended Family
Failing to create or update your estate plan with a blended family can lead to fighting, legal challenges, and loved ones being unintentionally left out.
If you don’t have a will, trust, or other estate plans when you pass away, then your property passes according to the Michigan laws of intestate succession, regardless of what you may have intended or promised. The results may be very different than what you would have wanted. This situation can also put a strain on family relationships at a time when everyone is overwhelmed with grief. When you create a plan ahead of time, you can ensure that everyone is accounted for and that everyone knows what to expect.
Building an Estate Plan Around a Revocable Living Trust
Trusts often work well as the foundation of an estate plan for blended families, and they can be set up in a variety of ways. When a trust is revocable, it can be changed or even canceled easily, which provides flexibility. With a revocable trust, you can control and use property during your lifetime and then ensure that it passes to loved ones after you pass away. You can also enable someone to manage your finances if you become incapacitated.
A trust-based estate plan can avoid the need for property to go through the costly, confusing, and time-consuming probate process. For this reason, these types of plans are popular for families in a variety of situations.
With a blended family, sometimes couples set up a trust together and sometimes they establish separate trusts. For instance, each spouse might set up an individual trust which provides support for their spouse during that spouse’s lifetime and then passes remaining assets to their children from a previous marriage. Or spouses can create joint pour-over trusts that funnel assets into separate trusts for the children from each prior relationship after both spouses have passed away. Trusts can be set up in a wide variety of ways, so it makes sense to discuss your situation and goals with your estate planning attorney and allow your attorney to explain the different options available for achieving your objectives. The approach you take might depend on whether both spouses want to manage their finances together or prefer to keep them separate.
Having a Will is Important Even if You Have a Trust
Since trusts are often established as the primary tool for transferring property with a goal of keeping assets out of probate, many people assume they do not need a will if they have a trust. However, it is important to have a will as a backup measure to control the distribution of any assets that are left out of a trust or not set up to transfer in other ways. Otherwise, these assets will pass according to the laws of intestate succession, destroying the balance you have established with your plan.
In addition, a will can accomplish some purposes that cannot be undertaken through a trust. If you have minor children, you can nominate a guardian for them in a will, but you cannot do so in a trust document.
For families with trust-based plans, it usually makes sense to create a pour-over will. This will take any assets subject to probate and move them into the trust for distribution, retaining your family’s privacy and the integrity of your estate plan.
Don’t Forget Beneficiary Designations
Insurance policies, retirement accounts, and many other types of accounts include provisions to pass proceeds directly to beneficiaries after you pass away. These beneficiary designations take effect before your property would be included in a trust or distributed through a will, so they are extremely important. You need to consider them while preparing your plan and ensure that the beneficiaries are changed if necessary to fulfill your plan objectives.
Inhulsen Law Can Create Right Estate Plan for Your Family
Every family is unique, and every family deserves an estate plan crafted with the specific dynamics in mind. At Inhulsen Law, we tailor plans to fit your specific needs and goals to ensure that your loved ones are protected in the short and long term. Schedule a consultation with us today to find out how we can build the right plan for you.
