By Stewart Koesten
The Brady Bunch may have been unique in the 1970s and 1980s but not so much today. The act of blending families together involves more than deciding in whose house to live. In fact there is quite a bit of financial blending that has to occur as well.
At the very least a new financial plan should be constructed to include the spouse/life partner. New goals considered. Decisions have to be made about various checking and savings accounts. In some, but not all cases, investment accounts require re-titling, or new payable-on-death designations.
The first several months are crucial in the event of an untimely death of one of the spouses. Careful consideration of life insurance needs and other risk management factors should be compared to benefits available from Social Security for spouses in the early months of a marriage. Couples newly married who were previously married for more than 10 years have unique Social Security benefit issues.
A major area of consideration for the blended family is the estate plan. The wills, trusts, powers of attorney and health directives may require review and revision. It is an area that is ripe for neglect and an opportunity to inadvertently disinherit a child.
Let’s say the first spouse to die leaves everything (insurance, 401k, real estate, etc.) to their surviving spouse. Suppose that spouse has children from a prior marriage. When the second spouse dies and leaves everything to her/his children (the ones from the prior marriage) the children of the first spouse to die could be cut out. Pay attention to asset titling and don’t neglect to discuss estate plans as it affects both sets of children in a combined family.
Here are some other planning ideas to avoid unintentional disinheritance:
• Craft an estate plan to fit your new family’s objectives. Get help from your estate planning attorney and financial planner.
• Carefully title assets so that they match the estate plan design. For example, are your assets owned by or payable to the trust (when a trust is used) so that it can be properly distributed at your death?
• Consider using techniques that could provide income from your estate to your surviving spouse without jeopardizing the transfer of assets eventually to your children.
• Consider separating assets needed by your children for their health, education, support and wellbeing into a trust for their benefit while your spouse is still living.
• Remember to determine whether it is wise to have the persons caring for your minor children (guardians) also acting as the caretakers (trustees) for the children’s inheritance.
Careful attention to the details surrounding the merger of two family units will prevent unfortunate and costly errors down the road. This is definitely an example of planning paying off!
For help with fitting your final wishes into your overall financial plan, schedule a meeting by clicking below, contact Stewart Koesten –firstname.lastname@example.org, or call (913) 345-1881.