REVEALED: SMART ESTATE PLANNING FOR BLENDED FAMILIES

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Blended families that consist of couples, their children and children from a previous relationship are not uncommon these days.

However, because the family gets larger, it becomes necessary to think about estate planning for blended families so everyone understands their inheritance and financial position within the family.

This can be a challenge, and professional advice is recommended. From good communication to legal protection, here are some things to know.

Professional Wills and Trusts

Wills and trusts are powerful and legal ways to manage an estate for any family, not just blended.

However, the complexities of a blended family where estates can be contested mean that wills and trusts and other legal planning help families allocate funds and resources in a more organised way.

There are many specialist services you can use, and even most family lawyers can help you with wills, trusts, mutual wills, specific gifts, and appointing an executor.

Open and Honest Communication

Poor communication is the downfall of many family problems.

When it comes to financial arrangements, family members can also become much more frustrated, as money is an important thing in life. Before making any decisions, it can help to discuss arrangements with your partner about who will receive what in the event of a life-changing incident or death.

From there, make your decisions clear with the children and explain why you have made them.

Financial Planning for Blended Families

Combined with step families, there are around 172,000 combined families in Australia as per the 2021 census.

If you have a blended family, then it could be pretty large when considering stepchildren and anyone else involved, and it can get messy when it comes to money.

Seeking professional financial advice is always recommended for complex legal and financial matters. A specialist team can help you with budgeting for family members and setting up savings trusts.

Necessary Legal Protections

Estate planning comes with built-in legal protection due to the nature of how it is set out.

However, there are also very specific legal protections that can be applied to ensure your will is carried out in case of divorce, an accident or death.

Prenuptial agreements are a good example, and many couples take that route.

This allows you to specify asset division among each party. However, there are also beneficiary applications such as life insurance and retirement accounts.

Reviewing and Updating as Needed

Things change all the time, and how you feel one day might not necessarily be the same a few years down the line.

For example, you may not want to support your ex-partner’s children in the case you have recently divorced.

Any policies, wills and trusts you hold can be reviewed and updated at any time.

If you feel someone should get more or less money in the event of estate division, then you can change this through the proper channels as and when needed. 

Summary

You can use professional wills and trusts services, such as family law firms, when estate planning for blended families.

Getting your finances in order is an advantage when doing this, and you can also review and update the terms of your estate when you wish to make changes.