Careful Planning for Blended Families is a Must

6/3/2016Step-children are naturally going to be part of the mix in any blended family divorce, writes credit.com in the recent article entitled "How to Keep Your Kids From Fighting Over Their Step-Parent's Inheritance."

When a spouse dies, the surviving spouse may feel some sort of real or perceived threat from their step-children over their inheritance. Solid estate planning can decrease or even eliminate the potential for this type of problem. Strategies include planning methods such as using a revocable living trust rather than a will.

A trust can be preferable when trying to protect your second spouse's inheritance because it's much harder for an unhappy step-kid to break a living trust. It's typically created way in advance of death or disability. Wills are in many instances signed at the last minute in hospital rooms or nursing homes. These scenarios can raise suspicion of undue influence from family members and lead to a challenge. In addition, it's more effective to disinherit an estranged child using a living trust. Only beneficiaries of the trust have a legal right to set aside its provisions—a disinherited child isn't a beneficiary. But with a will, anyone in the family can contest its terms. The trust can eliminate the possibility for a lawsuit.

A living trust can also be better than a will because its assets will flow privately to the surviving family after the first spouse dies—they don't go through probate. Wills are required to go through probate. That is the only place they have any sway. Probate delays the distribution of assets in a will, and it's a public process. This makes it easier for an estranged step-child or one of the children from the deceased spouse's prior marriage to find out who's getting what, which might motivate the kid to contest the will.

Whether you use a living trust or a will to distribute your assets after your passing, you can also add language to either document to decrease potential for of a contest. You can include a No Contest Clause, which stipulates that if somebody files a lawsuit in an attempt to litigate your estate plan, that person will get nothing. You can also give your surviving spouse a "limited power of appointment," which lets him or her cut an estranged child out of your plan—even if there's no legal challenge. It could be used in the event a child just tries to harass or intimidate the surviving spouse or other family members.

An online will or trust won't cut it with all of the issues involved with a blended family. You need the help of a qualified estate attorney.

Reference: credit.com (April 14, 2016) "How to Keep Your Kids From Fighting Over Their Step-Parent's Inheritance"

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