Blended families come with a lot of planning needs – building relationships, managing complex logistics and schedules, and charting a new normal. One consideration that often doesn’t jump to the forefront after a remarriage is estate planning amid a complex family dynamic. Whether a merger of families is in your future or you’re already part of a blended family, here are some best practices and topics to consider for the future.
Update Your Will
Having a will comes with the responsibility of making sure it is kept up to date. Standard guidance is to review and update your will every 3-5 years, though you should also do so after a major life event such as a divorce, remarriage, or the birth or adoption of a child or grandchild. You’ll need to clearly define your goals and intentions for the distribution of assets and consider the needs of your new partner, biological children, and stepchildren.
If you and your partner have joint assets or liabilities, you’ll need to create a plan that honors both your wishes and documents your joint intent. You will also need to agree on who should serve as your executors, trustees, powers of attorney, and other trusted roles. If you have assets that are solely in your name, be sure that you have documented how you want them handled after your passing.
Review Beneficiary Designations
With additional children or other family members in the picture, you and your partner should review not only your will, but also any accounts with designated beneficiaries. This includes retirement accounts, life insurance policies, and other accounts that would be distributed after your death. Be sure to review and update your designated beneficiaries and the percentage of assets allocated to each to ensure they meet your current wishes. This is also a good time to reassess your life insurance coverage and needs so that you can feel confident in the level of financial support left to your surviving spouse and children.
Consider a Trust
A trust can provide flexibility and control over the distribution of assets. Blended families may want to explore the option of creating a family trust to manage and distribute assets and to ensure that each family member receives a fair share, especially in the case of one spouse outliving the other. If you have minor children or grandchildren, a trust can also help to provide for their care and support in the event of your death. Appointing a trustee can offer an extra degree of assurance that someone you have confidence in is overseeing the distribution of assets in accordance with your wishes.
Update Agents and Directives
As partners come and go from your life, you’ll need to update the people you appoint to oversee your estate plans. This not only includes your executor, but also your financial and healthcare powers of attorney. Make sure you know who you’ve identified to handle your affairs, and that they know what your wishes and expectations are. This is also a good time to document your accounts and providers, and to update your healthcare advance directive.
Hold a Family Meeting
Open communication can help build trust in blended families and set the stage for successfully handling whatever future challenges may come your family’s way. Discussing your estate planning decisions with all family members, including your spouse, biological children, and stepchildren, can help set expectations and avoid misunderstandings. And, critically, it can help ensure that your wishes and preferences for understood and honored when the time comes. Curi RMB Capital’s Sue Christoph discusses the purpose and value of holding regular family meetings in this video and article.
After a marriage or divorce, it’s always a good idea to consult professionals who can help you conduct a thorough review of your planning needs. Your financial advisor can help you assess the big picture changes brought by a major life event, and an estate planning attorney can help navigate the legal and financial issues associated with divorce and remarriage, such as trusts and guardianship for minors. If you have questions, be sure to consult your advisor or reach out to a Curi RMB Capital team member today.
The opinions and analyses expressed in this newsletter are based on Curi RMB Capital, LLC’s (“Curi RMB”) research and professional experience are expressed as of the date of our mailing of this newsletter. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future time periods. Curi RMB makes no warranty or representation, express or implied, nor does Curi RMB accept any liability, with respect to the information and data set forth herein, and Curi RMB specifically disclaims any duty to update any of the information and data contained in this newsletter. The information and data in this newsletter does not constitute legal, tax, accounting, investment or other professional advice. Returns are presented net of fees. An investment cannot be made directly in an index. The index data assumes reinvestment of all income and does not bear fees, taxes, or transaction costs. The investment strategy and types of securities held by the comparison index may be substantially different from the investment strategy and types of securities held by your account. RMB Asset Management is a division of Curi RMB Capital.
