Many people do not begin to think about estate planning until well after they have started a career, gotten married, or had children. By the time we reach the point in our lives where we begin to think about what will happen to our belongings and our loved ones after we die, we have often already experienced big life changes. For many of us, that could mean multiple marriages and a blended family. So when we sit down to work out our estate plan, how do we navigate the murky waters of estate planning for blended families?
Can I use a prenuptial agreement in an estate plan for my blended family?
Just like with other estate planning tools, a lot of couples do not want to think about obtaining a prenuptial agreement. After all, who can blame an engaged couple for not wanting to think about how their marriage might end? However, just like other estate planning tools, prenups have a bad rap. They can be incredibly useful for couples with a lot of assets, or blended families who want to keep certain properties separate. Through a prenuptial agreement, you and your spouse will be able to delegate which property is joint and which is to remain separate. This can make the division of your assets among your blended family a lot easier in the event one spouse predeceases the other.
What is a Life Estate on property in Tennessee?
A lot of the time, when a couple remarries, one spouse will move into a home owned by the other. If this is the case for you, it may be worth considering a life estate.
What is a Life Estate?
A life estate is an ownership interest in real property for the duration of a person’s life. In other words, a life estate will allow the surviving spouse to continue living in the marital home until the end of their life without them inheriting the house outright or passing it down to their own children.
Use a Trust when Estate planning for blended families with multiple children
I want to make sure my children inherit from my estate
In some cases, your spouse may not distribute your estate to your children the same way you would. If you have certain assets or a specific amount of money you wish to go to your children, your best bet is to leave it directly to your children through a trust. Of course, this can be a difficult discussion to have with your spouse, but it may be the best decision for your family.
These are just three estate planning tools to consider for your blended family. There are dozens of others that you, your spouse, and your lawyer may find better suit your needs. Blended families are exciting and rewarding, but it is important to maintain your estate plan through one of life’s biggest changes!
If you’re a blended family with questions about how to create your estate plan in Tennessee, consider contacting an estate planning attorney to discover what is best for your situation.
Is there someone you have considered leaving out of your Will? There are plenty of reasons for wanting to exclude someone, a group of people, or everyone you know from inheriting from you. Maybe you’ve had a falling out, maybe they haven’t kept in touch like you hoped, or maybe you just like animals better.
People who know me are probably tired of hearing me say it, but I believe that no one is entitled to an inheritance. Whatever you want to do with your earthly possessions is entirely up to you. There’s no wrong decision- whether you want to leave everything to your children, your church, or your dog. It’s just a personal decision, like your hairstyle (although a bit more permanent decision).
If you don’t have a Will, the law in Tennessee leaves your estate to your closest relatives. By making a Will, you can leave your assets to anyone you like. The only exception to this is that you cannot disinherit your spouse or minor children.
If you don’t want your spouse or kids to inherit because you don’t like them, I hope you will consider counseling. However, that’s another personal decision. So is divorce, which is the only way to remove your spouse’s right to inherit from you. If you don’t like your kids, you have to wait until they turn eighteen to disinherit them.
If you want to disinherit someone, I encourage you to make it clear in your Will. If your Will goes through the probate process, the Court will look at what your intentions were. Leaving a nominal sum like $10 means that the person is not truly disinherited- they inherited $10. We like to acknowledge that the person has been disinherited and, depending on the situation, a brief statement about why. We are kind but firm to reduce any confusion or potential for a contest in the future.
And remember, relationships change and so do Wills.
By adding someone else to your bank account, you are giving them an ownership interest in whatever deposits you make into the account. What I often see is that the parent is the only one making deposits, but the child is handling transactions, usually to the parent’s benefit but sometimes in a way that might later be called into question.
Joint checking accounts with your children pose many issues
In the process of counseling clients, I often learn that an adult child has been added to a parent’s bank account as a joint owner. If this is something that you have been considering, please think again. While it can be fine under some circumstances, it can also cause problems down the road.
You will be responsible for your child’s unpaid debts
One danger to this is that if the adult children have an ownership interest in the account, and the child has unpaid debts, a creditor might try to collect the money owed to them out of the joint account, even though all the money belongs to Mom or Dad!
Your children will have issues with getting an equal share of your inheritance
Another sticky point of adding a child to a bank account is if you have more than one child. Often parents want their children to inherit equally and make arrangements for that through their wills or beneficiary designations. However, most joint bank accounts include a right of survivorship on the account paperwork so that if one account owner dies, the other account owner can continue using the account and gets to keep any money in the account. If you intend for your children to inherit equally, but only one of them gets the money in your bank account, that might cause some resentments and even lawsuits.
Give your children powers of attorney for finances instead
So what should you do instead? In most cases, I recommend designating someone you trust with your money to act as your attorney-in-fact for financial matters. By signing a Power of Attorney, this person will have the ability to manage your banking transactions, but will not have an ownership interest in your accounts that could cause the problems described above.
If you’re interested in obtaining a Power of Attorney or other estate planning documents, contact us to see how we can help.
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