Blended families, those marriages that include kids from prior marriages, are ever increasing as the divorce rates in the U.S. remain extremely high (about 50%). Indeed, as divorce rates continue to be high, and with the divorce tsunami ever increasing from last year and this year, blended families may become the standard. Though, for blended families, there are a few unique considerations for estate planning purposes.
First, many San Jose, California, estate plans have some trust involved. Though, now that two families have become one, who is entrusted to be the trustee can be tricky. After all, former spouses will have conflict of interest when it comes to their own interests and their children, which is the same for current spouses. Indeed, even one’s own children also have a conflict. This is why we recommend an independent trustee, like a lawyer or accountant. In fact, normally, the estate planning attorney that designs the estate plan is often nominated as the trustee. The trust documents will outline their duties to ensure one’s wishes are followed, but since they are independent, there is no conflict of interest between them and the heirs and beneficiaries.
Will and beneficiary designations
Deciding the scope of the estate and who gets what is more complicated as the family grows. This is why a recommended estate planning tool is designating different trusts for different beneficiaries or classes of beneficiaries. This can include a life insurance trust, which will only be paid out to the children. In addition, please be mindful that account beneficiary designation always trump will designations. For example, if a retirement account or life insurance policy has a named beneficiary, that person gets the payout, regardless of who a will designates as the beneficiary of that account or policy.
For those in San Jose, California, entering their second (or more) marriage, a prenuptial agreement can be extremely important. This will help guide a divorce, should one occur. Prenups can also help with estate planning.