blended familiesLife & Estate Planning is always a complex task. Everyone’s situation is unique and your particular personal and family issues must be considered. Many people have fairly simple circumstances. A married couple with one child doesn’t have too many decisions to make. But, for those with multiple marriages and children from different families, planning decisions can be complex.

First of all, you must discuss this with your spouse. If you each have children from prior marriages, and you each have certain assets that you brought to your current marriage, then you have to decide what will happen when one of you dies, and then when the second one dies. Consider how you want to benefit your respective children. Will it be equally, or in some proportional way? Will you blend your assets after the death of one of you, or have you already done that? How will you split them apart later?

A previous divorce agreement may contain terms that compel you to plan your estate in a certain way. You must consult that agreement. A current pre-nuptial agreement may also require you to plan in certain ways. Show these important documents to your Estate Planning Attorney before you begin planning.

One legal issue to consider is the right of a spouse to inherit. In many states, you cannot legally cut-out your spouse. You can write your Will anyway you want, but after your death your spouse has a right to get a statutorily determined portion of your Estate, no matter what your Will says. A pre-nuptial agreement may require a new spouse to waive the statutory share, but the failure to do so would result in a lawsuit regarding the pre-nuptial agreement and not a change in the estate distribution. That is, the spouse could take her statutory share although she might have to give it back in the lawsuit on the pre-nup.

So, what do you have to do to protect your children? If assets go to your surviving spouse, he or she can do anything with them. If you want to control or limit the way assets can be distributed, then you will need to use a Trust. You can leave certain assets in Trust and allow your spouse to have some limited right to them, such as income only, or income and principal at the discretion of a third-party trustee. The trust will say how to distribute the remaining assets after the death of your spouse (presumably to your own children). That way, your surviving spouse cannot spend all of the money, nor have the ability to leave it to someone else. You might want to use a trust for some of your assets, give some outright to your spouse, and give some outright to your own children.

Make sure you consider beneficiary designations on life insurance and retirement accounts. People often forget to update them as their lives change. Remember that your spouse must be the beneficiary of your 401k plan, unless he or she signs a waiver allowing you to name someone else. Consider any divorce agreements that require you to have insurance naming your ex-spouse as beneficiary. Also, consider whether or not to get more life insurance. You can increase the size of your estate, thus leaving adequate shares for both your new spouse and your children, with life insurance.

Remember the issue of jointly owned assets. These pass automatically to the survivor. Joint ownership is quick and easy to deal with upon a death, but if you don’t want the other person to assume full ownership of an asset upon your death, then you don’t want to use joint ownership.

Make sure you discuss your choices with your entire family. Don’t leave out children, step-children, or your partner. Whatever decision you make, let your family know that it is your own reasoned decision and that you weren’t influenced by your children or your new spouse to do something “wrong.” If your decision favors your new spouse, you owe it to your children to explain it to them. Don’t leave them wondering about your decision. A good explanation while you are alive may avoid fights, disappointments and hurt feelings after your death.