From time to time, couples with children find themselves in a situation that is no longer tenable as a married couple. When a divorce involves children, there are a lot of additional aspects that can make things challenging. For those single parents who remarry and have children with another person, life can become even more difficult when it comes to dividing assets in the future. How can parents in a blended family ensure that children from different sets of parents are equally cared for in the long term? With a few helpful tips, you can create an inheritance for children in your blended family.
One of the first steps you should take is to update all necessary information on your important documents. This includes wills, insurance policies, and workplace pension or retirement accounts. You will want to be sure to include both children while also fairly dividing your assets among existing children, new children, and your new spouse. Not only should you update your documents and will, but also decide whom the executor should be for these updated accounts.
Get a Prenuptial
Forbes points out that a prenuptial agreement is a smart way to put you and your new spouse on the right road to a better understanding with one another. You should not consider a prenuptial agreement as a replacement for a written estate plan, but it does offer a means of smoothly dividing assets before you tie the knot. A prenuptial agreement is typically based upon mediation principles that focus on extensive and open communication. It helps to keep the focus on fairness for both sides of the new family rather than protecting the assets of the wealthier party entering the marriage.
Set Up a Trust
Huffington Post notes that when one spouse brings significant assets to a marriage, a trust helps to ensure those assets are fairly divided among children and your spouse in the future. A trust is a good way of ensuring that your assets end up with the beneficiaries you choose rather than ending up randomly dispersed. More importantly, a trust can help you set up a potential stream of income for your dependents in the future that enables your spouse to maintain a current lifestyle without being financially disadvantaged. Your children will still receive capital at the end of the day as well.
Properly Communicate and Cooperate
Finally, an inheritance plan for the members of your blended family can help facilitate open and honest communication. With a consistent dialogue, you can bring all parties to common ground when making decisions regarding retirement plans and portfolios, use and dispersal of vacation properties, or even designation of assets for inheritance.
Blended families face a lot of challenges, and while many focus on the day-to-day routines, it is important to look down the road into the future as well. An inheritance plan can help ensure that all members of your blended family are treated fairly and taken care of adequately in the future when you are no longer around.
When receiving or creating an inheritance, it is best to seek help from your financial advisor. For assistance, call Manhattan Ridge Advisors.
The views expressed are not necessarily the opinion of Social Advisors, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.