08 Feb Blended families and estate planning
What exactly is a blended family? Most people think it means a family comprised of spouses and their children from prior relationships. But actually, it can mean a number of living situations outside of the traditional family. As a matter of fact, blended families outnumber traditional families in the United States, according to the U.S. Census Bureau!
It makes sense that a blended family would have special concerns and considerations when it comes to estate planning. There are so many scenarios that can arise in relation to inheritances left to biological children or step-children or even concerns about your dependents’ inheritance if your spouse should re-marry. There may be joint banking and savings accounts, a family home, retirement assets and more to consider.
There are ways of finding workable estate planning solutions for blended families. Here are a few to consider:
Irrevocable life insurance trusts: The Irrevocable Life Insurance Trust allows the grantor to place estate assets in a tax-free trust to shield it from federal estate taxes. The life insurance policy is owned by the “trust” and not the grantor, which means it can be excluded from the grantor’s estate.
Revocable trusts: This trust is founded while the grantor is still living and he or she controls the assets of the trust completely. The grantor can designate the beneficiary of the assets before and after his or her death. While the grantor is living, no one can amend, change or terminate the trust except the grantor.
Marital trusts or QTIP: The qualified terminable interest property trust (QTIP) is set up to provide income to a surviving spouse while also preserving underlying assets for surviving children. Federal laws may exclude inheritances between spouses from estate taxes.
No contest clause: What the no contest clause does in a trust or will is specify that if any child or spouse challenges the beneficiary designations, that party will forfeit his or her share of the estate. This helps ensure that the final wishes of the person making the will are followed without dispute.
Estate laws and tax laws, of course, are subject to change. These are only some of the legal considerations that may arise when planning an estate for a blended family. If you think you could use guidance with your estate planning, our legal experts are ready and willing to help! Contact us to set up your consultation. http://www.barsh-cohen.com/