Estate Planning For Blended Families: 5+ Tips For Planning Ahead

Estate Planning For Blended Families

Considering the inherent complexity of estate planning, it’s no surprise that many special considerations come up when doing estate planning for blended families. While imagining scenarios in which your estate is dealt with contentiously might not be pleasant, it’s important.

General guide to estate planning

You may want your spouse’s children to receive as much as your children will, or you may want your children to receive the bulk of your wealth. Your estate planning strategy will vary based on several considerations, from how you want the money distributed to where your money is invested. Here is our general guide to estate planning for blended families.

Home

Your home is likely to be your most valuable asset. In the case of blended families, how the home’s value is to be distributed upon the death of one spouse can be tricky. In a traditional arrangement, ownership of the home passes to the surviving spouse. One option is to form a tenancy-in-common arrangement.

Retirement Plans and Accounts

Retirement assets are relatively straightforward – you can designate your spouse, your children, or your estate as a beneficiary.  The calculation here is quite simple; evaluate how much money is in your accounts and who would most benefit from that money.

Life Insurance

Life insurance is one of the more interesting investments you can make to leave behind for others when you’re gone. Generally, life insurance is not taxable in the U.S. or Canada, so it’s an excellent tool if you’ve maximized your other tax-free investments.

Testamentary Spousal Trusts

You may stipulate that some of your investments be put into a testamentary spousal trust when you pass away. Income derived from that trust would be given to your surviving spouse. There would, however, be limits on their ability to access the capital in the trust.

Prenuptial Agreements

What is your company worth? Prenuptial agreements may be particularly useful if you own a business, especially if you expect the value of that business to increase significantly. 

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