According to the U.S. Census Bureau, blended families now outnumber traditional families. Accompanying high divorce rates, the increasing incidence of blended families can also be attributed to longer lifespans and remarriage after a spouse’s death. In fact, the number of remarriages has risen steadily over the last few decades. According to the Pew Research Center, in 2013, 40 percent of marriages included at least one spouse who had been married before. In 20 percent of marriages, both partners had been previously married to someone else.
While many families are happily blended, the situation can bring unique challenges when it comes to estate planning. Wealth planning should be done right away, however, and with very clear goals in mind. Typically, a remarrying couple will want the surviving spouse to have financial security if the other passes away. However, the situation becomes complicated and often contentious when there are children involved. Keeping everyone happy is not always easy.
The goal is to ensure your assets would be directed to the heirs of your choice should you pass away, rather than having them go to someone you do not know or would never choose. If careful planning is not done ahead of time, there are many scenarios that can create anger and heartache. For example, if a new husband passes away before his wife, and he leaves his estate to her – she may choose to leave what he earned to her children, rather than to his. This type of difficult scenario can be avoided with careful and collaborative planning.
Making the right beneficiary designations on retirement account and insurance policies is one of the most important thing you can do when planning your estate. Because a beneficiary designation overpowers everything else, it can be the determining factor in regards to who inherits what. In general, an asset will be distributed directly to the primary beneficiary or beneficiaries listed on the policy, regardless of what is stated in a will. For example, if your will states that an IRA should be left to your spouse, but you have named your child as the primary beneficiary, your child will receive the IRA. Likewise, if a remarried spouse fails to remove a former spouse from a life insurance policy, the former spouse instead of the present spouse will likely receive the proceeds if the policyholder dies.
There are many options for estate planning, including:
Protecting your estate in a blended family can be complicated, and the above represents only a superficial description of some of the options for estate planning. A lawyer with experience in estate planning for blended families can show you the very best options for your unique situation.
If you would like to learn more about estate planning, please contact an experienced Towson estate planning lawyer at the Law Offices of Jayme L. Levy LLC today. Call 410-512-6605 to schedule a consultation, or contact us online. We assist clients in Columbia, Ellicott City, Towson, Baltimore, and throughout Howard County, Maryland.