While estate planning is important for everyone, it is of particular concern if you are part of a blended family. You or your spouse may have children from a previous relationship as well as with each other. If you do not have an estate plan or it is insufficiently clear, your children’s inheritance may not be what they expect.
Emotions run high following a death in the family. Creating an estate plan that clearly designates what each child should receive can help prevent a tense situation from escalating into a nasty family conflict.
What are the challenges of estate planning in blended families?
The main challenge is dividing your estate fairly between your children and your spouse. You may leave all or most of your estate to your spouse, trusting that he or she will share the assets with your children. However, what often happens is that your spouse leaves out your children from a previous relationship, favoring his or her own children instead. This may mean that your stepchildren end up inheriting more from you than your biological children. This may provoke the ire of your biological children, especially if your stepchildren wind up inheriting objects with sentimental value.
How can you meet these challenges?
There are several different methods to secure your biological children’s inheritance. The first and most basic is to create a will that explicitly states what each child is supposed to receive in sufficient detail to avoid any will contests. Another option is to take out a life insurance policy and name your children as beneficiaries. In addition to a will, you may also want to create a trust that benefits both your spouse and your biological children. This can ensure the inclusion of your children without shortchanging your spouse.
