While the American divorce rate is on the decline, separation remains common among U.S. couples. The American Psychological Association estimates that between 40 and 50% of marriages nationwide ultimately end in divorce. Naturally, many parents eventually remarry and form new family bonds.
Merging multiple households can be emotionally and logistically complicated. That is especially true when it comes to creating an estate plan that provides for a current spouse and stepchildren while maintaining financial support for children from a former marriage.
1. A simple will may create complications
When family relations are complex, a simple will may not be enough to prevent future disputes and ensure assets pass on as intended. From giving specific instructions for transferring family heirlooms to including a no-contest clause to head off potential conflicts, blended families often benefit from a carefully considered will.
2. Trusts are often a good option
Remarried parents often create a trust to hold certain assets. A trust allows an individual to provide a current spouse with access to funds during the spouse’s lifetime while ensuring the remainder transfers to children or grandchildren after the spouse dies or remarries.
3. Being frank about finances may prevent disputes
In blended families, parents often avoid estate planning because they worry about potential conflict. However, having those hard conversations early may actually help to strengthen family bonds. In addition to fostering financial transparency between spouses, creating a thoughtful estate plan may help all members of the family to understand and respect the choices made regarding inheritance.