April 25, 2017 Twitter_Logo_White-on-Blue Estate Planning for Blended Families According to Smartstepfamilies.com, 40% of married couples with children in the US are step-couples—meaning at least one partner has a child (under the age of 18) from a previous relationship . Now a days, blended or step-families are becoming more of the norm. A blended family brings together assets, debts, and children, most often with different values and family dynamics. These types of families can present many challenges when it comes to estate planning. Each case is unique and requires a step-by-step review by a financial planner to ensure that the estate plan is well developed and creates harmony in the family. Working with a financial planner, who can act as an objective third party, to develop your estate plan can alleviate stress, anxiety and disagreements that may arise. Before you meet with a financial planner, it’s recommended that you discuss your estate planning goals with your spouse. What retirement accounts do you have? Do you have financial obligations to your children from a previous marriage? To whom do you want to leave the property you own? What family heirlooms do you want to pass down? Write down all your accounts including retirement and investment accounts. During your meeting with a financial planner, the planner will gather data from you and your spouse including assets, previous settlements and debts during a detailed interview. This will allow the planner to clearly understand all financial obligations each spouse has. In addition, the planner will also review beneficiaries of all accounts, as very often, clients forget to update this information when they divorce or remarry. Once your planner has gathered all the data, he or she, in partnership with your attorney(s), can make suggestions on the best course of action for you and your family. Some options may include: Non-reciprocal Will: This type of agreement gives part of your estate to your surviving spouse and part to your children. These types of wills will look different for each person. Trust(s): Trusts are often used to separate assets and property between the surviving spouse and the children of the deceased spouse. Life Insurance: You can purchase life insurance to either provide for the surviving spouse or to provide for the children of the first spouse. It’s most common to purchase life insurance to provide for the children. Irrevocable Life Insurance Trust (ILIT): An ILIT is designed to own a life insurance policy. You can transfer ownership of an existing policy to the ILIT after it’s been formed or the trust can purchase the policy directly. You can’t act as a trustee for the trust; your spouse, adult children, friend, attorney or financial institution can serve as a trustee. Family Limited Partnership (FLP) or Limited Liability Company (LLC) is comprised of family members to centralize family business or investment accounts. FLPs pool together a family’s assets into one single family-owned business partnership that are split into shares owned by the family members. Once you have reviewed all your options and determined the best course of action for your family, make sure family members are aware of your estate plan. Death is a stressful time for the surviving family members; a detailed estate plan alleviates stress post-death.  http://www.smartstepfamilies.com/view/statistics Disclaimer: The information provided in this blog post is generic and not specific. Its purpose is to introduce the public to estate planning terms. Laws vary by states and each case is unique. Working with licensed financial and legal experts is recommended to detail your estate plan.