Most of us need to do some type of estate planning, but it’s especially important if you are part of a “blended” family. And the best time to start is now – before these plans need to be implemented.
Estate planning can be complex, so you will need help from a qualified legal professional. But here are a few general suggestions that can be suitable for blended families:
To ensure that “everyone gets something,” you could name your current spouse as primary beneficiary and your children from a previous marriage as equal contingent beneficiaries. But the primary beneficiary will receive all the assets and is free to do whatever he or she wants with the money. To enact your wishes, you can name multiple primary beneficiaries and designate the percentage of the asset each beneficiary will receive.
So far, so good. However, issues can arise if you name your surviving spouse or one of your children as the “successor trustee” who will take charge of the trust upon your passing. Your spouse, acting as successor trustee, could choose to invest only in bonds for income, but if he or she lives another 20 or so years, the value of the investments within the trust will probably have diminished considerably – leaving your children with very little. Conversely, if you name one of your children as trustee, the child could invest strictly in growth-oriented investments, leaving your surviving spouse with greatly reduced income. To be fair to everyone, you may want to engage a professional third-party trustee. This individual, or company, is not a beneficiary of the trust, is not entitled to share in the assets of the trust, and, ideally, should have no “rooting interest” in how proceeds of the trust are distributed.
Above all else, share your estate-planning intentions with members of your blended family. You may not be able to satisfy everyone, but through open communications, you can help prevent bad feelings – and unpleasant surprises.
For more information please contact Cleve Grissom at 407-891-7833.