Estate Planning – Blended Families
There are lots of issues with the new world that we live in. The old world of a single nuclear family still exists, but in much fewer numbers than in years past. So, as you can believe, we see a lot of new types of families, included families that are blended. These families have their own issues and we are constantly working with them to help them see their estate planning needs. See the estate planning tips below.
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Estate Planning for Blended Families
Many Americans have so-called “blended” families. In such a family, one or both spouses have children from a previous marriage. Estate planning can be difficult for a spouse in such a family who wants to provide for a surviving spouse and for children from an ex-spouse.
A popular technique is to use a qualified terminable interest property (QTIP) trust. In such a trust:
* At the death of the first spouse, assets pass to a trust for the survivor. No one else can receive distributions from the trust.
* At the death of the second spouse, any assets left in the QTIP trust go to beneficiaries named by the first spouse to die. Typically, that will be the children of the first spouse to die.
On paper, such an arrangement sounds like it takes care of both sides. However, in many remarriages the surviving spouse is much younger than the one who died. In fact, the survivor may be close to the age of the children of the spouse who died. Those children may have to wait many years for their inheritance.
A better approach is to provide for biological children as well as for a surviving spouse at the first death. Assets can be divided at that time. If an asset division is impractical, life insurance may help to provide some inheritance for all parties.
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