Not paying careful attention to family dynamics and other special issues is sure to create a less than desired result in the event of illness, incapacity or death. A key to a smooth transition upon disability or death is a good, personalized life and estate plan before a health crisis.
A Special Strategy
Remarriage may result in cordial but not close “step” relations. Often, the parent is the “glue” that holds the family together. Once the the biological parent dies or becomes disabled, things can fall apart.
For example, if the spouse with the majority of assets dies first, who wins? The surviving spouse? The children? If a parent is not careful, their children might be unintentionally disinherited. If the children are protected, the surviving spouse may be disinherited.
A special plan for the blended family would include a prenuptial agreement, along with a fully-funded revocable living trust. This requires an estate planning attorney with specialized knowledge about planning for extended families.
Another key component in an estate plan for a blended family is the successor trustee. It’s essential that the person chosen is savvy, sensitive and compassionate and familiar with any of the family issues.
Key Points to Consider
Here are some questions to consider:
• Who will be chosen to be the successor trustee?
• If it’s one of the adult children, how will she feel about paying money to her step-mother?
• How can the surviving spouse be prevented from changing the deceased spouse’s beneficiaries?
• How will the children feel about the step-parent spending their inheritances?
• How will the spouse feel about the children making cessation of life choices for him or her?
• What is the relationship between the successor trustee and the surviving spouse or the children?
• What role are the trusted advisors to play in making the succession plan go how it is planned?
• How will the assets earned during the marriage be distributed?
• How should the required retirement plan distributions be made?
• How long should the children wait to receive “their money,” especially if the surviving spouse is only a few years older than the children?