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Estate Planning for Blended Families: What You Should Know

Family dynamics are changing. And it’s more important than ever to have an estate plan that takes care of everyone you love if something happens to you.

Estate planning is already difficult. But what if you’re a part of a blended family? How do you plan for your children and/or stepchildren and ensure no one is unintentionally left out?

We’ll walk you through the importance of estate planning for blended families, some common pitfalls to avoid, and how you can get help.

How Estate Planning for Blended Families is Different

A blended family happens as a result of a divorce or remarriage and involves one parent entering a new relationship with children from a previous marriage.

Blended families are beautiful and are common in the United States. But beyond the wedding bells, what they don’t tell you is that there’s more work you need to do behind the scenes to ensure everyone in your family is well taken care of.

North Carolina does not naturally provide for all blended family members equally if you pass away. While community property law automatically recognizes and provides for a surviving spouse, the same can’t be said for children from previous relationships, including your spouse’s children.

When you pass away, this can lead to a less-than-ideal split of your assets, stirring up drama and a knock-down, drag-out battle in court. This can happen as a result of a couple of things.

Common estate planning mistakes that blended families make include:

  • Forgetting to update their beneficiary designations
  • Failing to update their estate plans or not having an estate plan to begin with
  • Blindly trusting your new spouse to “do the right thing” and split assets how you would
  • Not consulting an estate planning attorney

Simple mistakes like these can have huge consequences when settling your estate. Without an air-tight estate plan, your assets could wind up in probate—a process where the court decides how your estate will be distributed, which can be expensive, time-consuming, and fraught with conflict.

But you have a say.

You can make an estate plan for your children and your spouse’s children and decide what happens to your assets when you’re gone. We know the last thing you want is the state making decisions about your family’s future.

Let’s look at your options.

How to Dodge Blended Family Inheritance Issues

When you marry into a new family, that family becomes yours—at least in a symbolic way. Unless you or your spouse legally adopt the other’s minor children, they aren’t automatically entitled to your estate.

Here are a couple of ways you can fix that.

#1 Update Your Beneficiary Designations

If you have bank accounts, life insurance policies, and retirement accounts, you have these little things called beneficiary designations. Beneficiary designations are selections you make deciding which person or persons should get that money should something happen to you.

If you were married before, it’s quite possible that you forgot to remove your former spouse as your primary beneficiary. Sure, your new spouse or your own children could contest the designation and fight it out in court, but you have the power to change that right now.

Luckily, changing your beneficiary designations is often as simple as logging into your online account and updating it or calling the financial institution that holds your account.

Even better, accounts with beneficiary designations bypass probate court, so as long as they’re up to date, your beneficiaries will receive their money as soon as possible. But be wary of leaving assets to minor children.

Kids can’t legally inherit assets, so anything you leave to them will have to be managed by an adult—whether or not that’s someone you trust—until they’re of legal age.

#2 Inventory Your Assets

It’s difficult enough trying to keep up with all of your responsibilities. So, we don’t expect you to know all of the financial accounts you have offhand or the valuable property you own. And even if you do, there’s an excellent chance that your children and your new spouse won’t.

Take some time to put together a list of all your financial affairs, including:

  • Checking and savings accounts
  • Stocks and bonds
  • Retirement planning documents
  • Your life insurance policy
  • Brokerage accounts
  • Business interests
  • Vehicles
  • Real estate
  • Personal valuables and family heirlooms (jewelry, paintings, etc.)

You’ll need to plan for all of these, including what goes where and in what amounts.

#3 Consider Creating a Trust

Trusts are one of the most effective estate planning documents to protect your assets after you die (and it’s not just for rich people).

A living trust is a document you create during your lifetime saying what should happen to your assets after you pass away. It creates a fiduciary arrangement where someone (a trustee) holds and manages trust assets in the trust for the benefit of your beneficiaries.

What’s great about it is that the assets in the trust are no longer in your name—providing all kinds of tax benefits—but you can keep enjoying them as if they were.

Trusts can be created for different purposes. Maybe you want to put a little something away for your child’s education or make sure they have the means to support themselves when they reach adulthood. Whatever your goal, there’s a trust out there to help you accomplish it.

#4 Schedule an Appointment With an Estate Planning Attorney

Estate planning is much more than just throwing a couple of pieces of paper together and letting them rot away in your file cabinet. It’s an ongoing process that changes as you change and should reflect your values and goals. When it comes to a blended family, there’s a lot to consider, and a cookie-cutter approach isn’t going to cut it.

A professional estate planning attorney with experience in blended families estate planning will ask all the right questions, help you avoid common hiccups that often get overlooked, and make sure that when the time comes, your family will have no issues picking up where you left off. What’s even better is getting the help you need is only one call away.

Need Estate Planning in North Carolina? Help Is on the Way. Call Cary Estate Planning Today.

Having an estate plan doesn’t mean you don’t trust your new spouse to handle things well.

It’s a smart financial decision that ensures everything and everyone you care about is taken care of if something goes wrong. Because if something does happen to you and you don’t have an estate plan, you won’t get a say.

Make sure your voice is heard—contact an estate planning attorney at Cary Estate Planning today.

Author Bio

Paul Yokabitus

Paul Yokabitus is the CEO and Managing Partner of Cary Estate Planning, a Cary, NC, estate planning law firm. With years of experience in estate and elder law, he has zealously represented clients in various legal matters, including estate planning, guardianship, Medicaid planning, estate administration, and other cases.

Paul received his Juris Doctor from the Campbell University School of Law and is a North Carolina Bar Association member. He has received numerous accolades for his work, including being named among the “Best Attorney in Cary” in 2016 and 2017 by Cary News and Rising Star in 2020-2023 by Super Lawyers.

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