How to plan for a future with stepchildren, children, in-laws and exes
Estate planning isn’t the most pleasant topic or discussion point among family members, but it is an important one. Because it is so uncomfortable to have these difficult conversations, many people don’t want to think about creating a will. But whenever you experience a large life change, such as marriage, having a child, going through a divorce or an unexpected cash windfall, it should be viewed as an opportunity to talk about estate planning.
As families become more blended, there are more unique considerations when planning for a future with stepchildren, children, in-laws and multiple exes. It’s important to take early steps to take your family situation into account. Start the process by having an open and honest conversation with your spouse or loved ones about your existing finances, ultimate goals for the future and expectations around how you want your assets distributed.
If you have a sizeable life insurance policy or retirement savings account, designate beneficiaries of these assets to ensure the right individuals will be able to access and control them. While minors are not legally able to control assets, a guardian may be appointed by the court to manage an asset until the person turns 18. Both should be designated to trusted individuals.
Confirm Power of Attorney
Designating a power of attorney allows you to select a person to manage your financial and medical affairs and legal decisions if you are unable. This entails creating a document that explains your wishes if you become terminally ill (also known as a living will), establishing a health care power of attorney that gives an individual the ability to make medical decisions on your behalf, and a durable power of attorney naming a person to handle your financial affairs.
You will want to confirm that any previous powers of attorney are no longer active, such as in a previous marriage, and opt for naming your children, spouse or other trusted individual as your estate agent. Wherever possible, choosing someone who is level-headed and can get along with family members can help prevent any possible future conflict.
Set Up a Trust
It is very common for people to leave everything to their spouse in their wills, but what if you get divorced or no longer want to leave anything to your children from a previous relationship? Establishing a property trust is one way to ensure your assets and money go to the right people. To do so, you must select a trustee, preferably a neutral party, who can handle your affairs after you die.
Taking No Action
If no efforts are made to establish an estate plan, your money, property and assets will be divided according to a state’s intestacy laws. This means there will be no say in how property is split among your spouse and children, and for anyone else (namely, stepchildren), they will likely not inherit anything. Taking time to minimize the potential for stress after you are gone is essential.
While these conversations are never easy, there are resources available for additional help and support. To start an estate plan, or revisit an existing one, contact an experienced ALA attorney today.