Blended Families Require Estate Planning

Fairfax, VA (Law Firm Newswire) January 22, 2016 – Those who have blended families can face difficult estate planning issues. They may wish to leave a portion of their estate to their current spouse and their children, their children from prior marriages, and in some instances, their children from their spouses’ prior marriages.

It can be a daunting task to provide for all members of one’s family. It is best not to depend on a spouse and children to work things out because there could be family arguments and possible litigation following one’s death. There are some estate planning vehicles that may be used to establish a plan that meets one’s needs.

Prominent Virginia estate planning attorney Lisa McDevitt said, “Estate planning can be very complex for blended families, who risk having unintended consequences, including inheritance by a former spouse, or by one child instead of another. With proper planning, one can ensure that the estate is transferred to the correct beneficiaries.”

Prior to marrying for the second time, it is imperative that one think about one’s estate, particularly if there are children from a previous marriage. One should create a prenuptial agreement that contains a waiver of a spouse’s right to a minimum of one-third of the estate, provided that the spouse receives some portion of the estate. Such an agreement would offer protection to the children of the first spouse to die because their parent’s estate would be transferred to them instead of to the new spouse.

It is also advisable to establish a trust from which the surviving spouse and children can benefit. One should choose a trustee who will adhere to one’s wishes, and ensure that the assets are distributed to the surviving spouse and the children named in the trust. By creating a trust, one can also safeguard assets from the claims of creditors and children’s spouses. In addition, one can have a “no-contest” provision within the trust that reduces the risk that anyone would challenge the trust.

Another useful estate planning tool is an irrevocable life insurance trust (ILIT), which can prevent the disinheritance of one’s children because the trust designates them as the only beneficiaries of the life insurance policy. Since the policy pays the trust right after the death of the policyholder, each child will receive his or her inheritance immediately. The funds in this kind of trust are not part of one’s estate, and thus, are not subject to federal estate taxes. Although one’s spouse must clearly waive his or her right to one’s retirement account if the account holder wishes to transfer the account to one’s children, an ILIT does not have such a requirement.

Furthermore, it is important to thoroughly review all of one’s assets that are marked by beneficiary designations, especially one’s insurance policies or retirement accounts because the terms of the beneficiary form govern the distribution of those assets, regardless of statements made in a will or trust.

Learn more at http://www.mcdevittlaw.net