An important issue in dealing with wealth transfer for blended families is how the assets flow to the surviving spouse and family members or after the death of the surviving spouse. Ensuring the surviving spouse and his/her children are financially secure while providing an inheritance to your biological children can be accomplished through methods such as qualified terminable interest property trusts or irrevocable life insurance trusts. Both allow the assets of the deceased to flow in certain directions and potentially at certain intervals to ensure all parties receive a share of the wealth appropriately.
In an article titled “Tips for Successful Wealth Transfer to Your Survivors,” The (Lakeland FL) Ledger explains that blended families without a proper estate plan for wealth transfer could see problems that don’t happen with traditional families. For example, state inheritance rules, intestate laws, and conflicts in beneficiary designations could be inconsistent with the will. In addition, a disinheritance of new family members without the knowledge of the entire family can cause emotional friction between the surviving family members.
There have been some laws enacted that have changed how beneficiary designations are handled, so make sure your estate plan is in sync with your retirement accounts. Do this because those beneficiary designations generally supersede what is directed in your will.
Also, the original article says having a trust as a beneficiary of an account is a good way to control wealth transfer. It allows the assets to flow through a trustee rather than an account custodian. The discretionary distribution of assets is a method of controlling "from the grave" how your money is to be given to certain family members who might have issues dealing with their finances. It’s what’s known as a "spendthrift provision."
You can accomplish secure wealth transfer and estate planning by working with an experienced estate planning attorney. Protect your wealth and the relationship with your heirs by carefully creating an estate plan and discussing that plan with your family.
For more information about estate planning, please visit my estate planning website.
Reference: The (Lakeland FL) Ledger (February 4, 2015) “Tips for Successful Wealth Transfer to Your Survivors”
