Featured Post

The Blended Family

It is likely that you or someone you know is on their second, third, maybe even fourth marriage. Although they have found happiness more than once in their life, there are many complications that exist with a blended family. One such difficulty is determining who receives your assets upon your passing: your spouse, your children from a prior relationship, your spouse’s kids? The idea of “yours, mine and ours” can fracture families.

When we work with clients who have a blended family, we stress the fact that deciding who receives your wealth upon your death is essential. The challenge is satisfying everyone involved.

If you do not plan correctly and view the whole picture, including retirement accounts and life insurance policies, you may unknowingly disinherit someone, intentionally or otherwise.

All too often, a former spouse remains as named beneficiary on an account. Regardless of what your Will or Trust say, the beneficiary designations trump all others. Therefore, we must be proactive in reviewing all of your assets, or else everyone, except your former spouse, will be unhappy.

Another error occurs when a spouse names the current spouse as primary beneficiary and children as equal contingent beneficiaries. This is done so that everyone will receive something. Conversely, your spouse receives all the assets in this situation and will be free to act as they wish. They can spend all of the assets or even change the contingent beneficiaries upon receipt of the money. When a retirement account is involved, upon the first spouse’s death, the surviving spouse inherits the account and the contingent beneficiaries go by the wayside, even upon the surviving spouse’s death.

Often times, people assume that their spouse receives everything upon their death simply because they are married. Others assume that their children receive the bulk of their estate because they are their blood. In both instances, each assumption is wrong. In Pennsylvania, without a will or beneficiary designation, the Commonwealth provides us the following chart to determine which of your beneficiary’s receives what percent:

An easy remedy is to name your spouse and children as beneficiaries on such an account and dole out percentages rather than an outright distribution to one person. Remarried couples often use a trust as the vehicle to spell out their wishes. With the intention of providing income for life for the surviving spouse, we can name the children as the beneficiaries. The tricky part is naming a successor trustee. Without proper planning, the plan could fail which is why often times a corporate fiduciary is involved so that the assets remain consistent and continue to grow.

What can you do?

We can discuss your particular situation and determine the best option for you and the families involved. This may include a post-nuptial agreement, a spendthrift trust or even a bloodline trust depending on your overall wishes. There is no right answer but there are a lot of options.

We spend so much time and money planning for now – our wedding, holidays, vacations – let’s take some time to plan for your loved one’s futures as well ensuring that the family will not be fractured upon your passing.