Estate planning is preparing a plan that charts out the dispersal of assets in case of an individual’s death or incapacitation.
The estate plan dictates how the estate will be distributed among the beneficiaries and how the debts will be paid. Moreover, an estate plan might also include various conditions for the beneficiaries to meet to access the assets.
There are many components to estate planning. However, knowing just five components of estate planning or even just three is necessary for all types of families, but it becomes even more important when the family dynamics shift. Relationships are already complex as it is but when you involve two families together, it can complicate things further.
In a blended family, the couples might have children from each of their previous marriages, along with children from their marriage living together. Even if the family dynamics are sound, things can get complicated after the demise of the family’s guardian.
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So, estate planning for blended families is important to safeguard the interest of the rest of the family.
Many people often mistake charting their own will, but it can cause various loopholes in the will that might render the will and other estate planning documents useless.
Here are some of the key components of estate planning for blended families.
- Setting up a trust
It is a common legal strategy to put most or at least some part of the legal assets under the name of a trust. By placing your assets into the trust, you can ensure that your spouse is financially secure after your demise. Moreover, after your spouse passes away, anything that would be under the trust will be distributed among the beneficiaries as per the conditions.
- Trustee Selection
When creating an estate plan, you also have to choose the executor as they will oversee the assets documented in case of your incapacitation.
They will be the ones to ensure that the remaining assets are dispersed among the beneficiaries as directed by you under the estate plan.
In a few cases, people choose a family member or a close one to act as the executor of the will. But, in some cases, it is common to choose a lawyer or accountant.
Ideally, the right person is the one who understands the complicated dynamics of a blended family and must be a financially responsible person.
One important thing you must consider is the relationship between the trustee and the beneficiaries. If both the parties do not have a good relationship, you must consider someone else to be your trustee.
- Living wills and power of attorney
A living will is a document or a record that states your medical wishes if you become incapacitated. A well-made estate plan includes a living will, healthcare, and a durable power of attorney.
A healthcare power of attorney is a document that makes a person of your choice responsible for making all the medical decisions for you when you will not be able to do so for yourself.
The person responsible for durable power of attorney will oversee the finances in case of incapacitation.
When it comes to power of attorney, you must leave it to someone who is trustworthy and can provide an unbiased approach.
These are some components of estate planning for blended families. Estate planning can safeguard the future of your family after you pass away. If there is no estate plan in action, your family will have to jump through hoops to inherit the property.
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