Today we’re going to focus on creating estate plans for blended families.
Per worldpopulationreview.com “in the United States, about 50% of married couples divorce, the sixth-highest divorce rate in the world. Subsequent marriages have an even higher divorce rate: 60% of second marriages end in divorce and 73% of all third marriages end in divorce.” The good news is that Utah’s divorce rate is only 9.00%.
The point of the statistic isn’t to promote a divorce from your current spouse, but more to state that the family dynamic is changing. Besides divorce, many widows and widowers are getting remarried. Therefore, we are seeing more and more blended families.
What is a blended family?
An example of a blended family is if you had if children with your first spouse who you then divorced, you then married someone who already had two children, and now you and your current spouse have an additional child. Here, you’ve blended three families together: “Theirs, yours and ours”. Or again, you are widow, you have five children, not to mention your grandchildren, and you marry a widower with two children, not to mention their grandchildren. This is another type of blended family. These dynamics may create some resistance upon either spouses’ incapacity or death.
Steps to take to create an estate plan
Remembering that each spouse has a different take on what they want, let’s discuss a few of steps to take that are more unique to blended families.
First, you and your spouse will want to take an inventory of your assets and debts. Remember assets include real estate, stocks and bonds, and bank accounts, as well as life insurance policies and retirement plans. At this stage, you want to be honest with each other because it might create hurt feelings in the future.
Second, who gets all of the assets upon incapacity or death of one or both of you? During your lifetime, you will probably desire to share the assets, but what happens when one of you dies? Let’s say you die first, will your current spouse provide for your previous two children? Or just the child you had together? What happens when your spouse dies after you? Will all of your assets go to your spouse’s previous children and your child together and nothing is given to your previous two children? Or in the widow/widower scenario, what happened to the assets that the widow/widower inherited from their deceased spouse?
Third, watch how you approach listing beneficiaries in your retirement accounts. If you list your spouse as the primary beneficiary and then your sole children, your spouse can take that money from the retirement account and roll it over into their own retirement account and change the beneficiaries. If this is something you worry about, the simple solution is splitting your account and listing your spouse as one beneficiary of one account and the children as the beneficiaries of the second account.
Again, this isn’t intended to scare you into thinking evil thoughts of your spouse. It’s intended to show you the complexities of blended families and the necessity of having an estate plan. There may be family heirlooms or mementos that you want to keep in your direct family versus sharing that heirloom or memento with the other parts of your new family. I would love to discuss these new dynamics with you and help you and your spouse create a plan of partnership. Call me, Debie, at 646.592.5311 or email me at firstname.lastname@example.org.