Blending a family is not an easy task, but doing so successfully can create a new and strong family unit. Among the challenges are how to blend finances.
Blended families are no longer limited to television sitcoms. The Pew Research Center reports that 41% of all Americans have at least one step-relative of one kind or another. As many as 1,300 new stepfamilies or blended families are created daily, according to the Stepfamily Foundation. But blending families includes decisions about finances, and that includes estate planning issues.
The Miami (OK) New-Record’s recent article, “4 tips to resolve financial concerns in stepfamilies,” provides some tips and answers for issues within stepfamilies.
- Types of accounts should be defined. A major issue for stepfamilies can be how to split finances into “yours,” “mine” or “ours.” Any combination of accounts can be just fine, but spouses should clarify the rules at the start to avoid confusion. Financial circumstances can change, so couples should review their program regularly to make sure that they have the best approach for their situation.
- Keep documents up-to-date. After remarrying, review the beneficiaries of life insurance, pensions, and other financial accounts. It is also important to create or update a durable power of attorney, living will or a healthcare proxy to name a person to make decisions, in case of incapacity.
- Modify your will. Inheritance issues can make children and spouses concerned about their financial futures. With that reality, a newly remarried couple should draft wills and revise any existing wills to address important estate planning issues. Wills must state, as specifically as possible, what each beneficiary will inherit. This helps minimize potential squabbles among siblings and also between the surviving spouse and children from an earlier marriage. Step-children aren’t usually considered your legal heirs, so they may not inherit if you pass away without a will containing specific provisions for them.
- Talk with professionals. An experienced estate planning attorney will have had experience with the unique challenges facing blended families. Discuss the use of trusts, or purchasing additional life insurance to ensure that all of the children are properly protected. Be open to the discussions and to communicating with parents and children to help further the final goal: a happily blended family that remains a family after the parents have passed.
Reference: Miami (OK) New-Record (May 20, 2017) “4 tips to resolve financial concerns in stepfamilies”