Estate planning for a blended family can have unique challenges. Of particular concern: taking care of your children from previous relationships after you’re gone, while also providing for your new spouse. So how do you protect both?
Leave Everything to Your New Spouse: The concern: If you leave all your assets to your spouse, are you sure they will provide for your children? The surviving spouse is now in charge of all the inherited assets and may put his or her kids first. Or worse, what if the surviving spouse marries again–adding more complications? Estate planning principal Dan Ruttenberg says “leaving all of your assets to your new spouse can be a risk because those assets may never make it to your children.”
Leave Everything to Your Children: The concern: If you leave all the assets to your children, your spouse might have a dramatically negative change in lifestyle upon your death.
“Split the baby”: Instead of leaving everything to your spouse, you can “split the baby.” With this method “some assets are left to your spouse and some assets are left to your children,” says Ruttenberg.
Leave assets in a trust: Leaving your assets in a trust for your spouse is the most common solution. “While those assets are in a trust, your new spouse can receive income and even have access to principal,” says Ruttenberg. However, your children will receive what is leftover at the end.
Creating an estate plan for your family will help protect everyone advises Ruttenberg. The above solutions have advantages and disadvantages. What’s right for you will depend on your specific circumstances.
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