Revocable Living Trust for Blended Families
If you have a complex family dynamic, you might be wondering what estate plan is right for you. Learn about a revocable living trust for blended families now.
Did you know that one in three people don't have a living trust set up because they feel like they don't have enough assets to justify one? Setting up a trust or a last will and testament is essential that your assets get distributed to who you want, and your dependents are cared for after you're gone. Thinking about trusts can be overwhelming and complicated, especially if you're in a blended family. Estate Planning for Blended Families is something we can help you with.
A revocable living trust for blended families is a great option. Even if you have a wonderful family dynamic, letting your new partner and your children figure your estate out after you've died can be disastrous. It's best practice to figure out the details while you're still alive. Sometimes you can even set up a different trust for your children.
This guide will go over estate planning for blended families. Minimize the stress on your heirs and other family members while honoring your spouse and children.
Another term for a revocable living trust is just revocable trust. It's a document that outlines how your assets will be distributed after you pass away. Your assets can include:
- Bank accounts
You create a living trust while you're still alive. The assets you put in the trust get transferred to your beneficiaries when you pass away. The difference between a revocable trust and other types of trusts is that you can cancel or change the trust at any time. Also you can choose to leave your assets in Trust, creating what is called a Dynasty Trust for your family.
Why Choose a Revocable Living Trust for Blended Families?
Most individuals want their assets to go to their children instead of their stepchildren. If you fail to set up a trust or will before you pass away, there's no guarantee that will happen.
For example, say you have two children from a previous marriage, and your new partner has three children. If you pass away first, your assets may go to your spouse if they are not properly designated. Your spouse could leave everything to their children and disinherit your children when he passes.
With a revocable trust, you can designate who your beneficiaries are. You can also provide for your surviving partner within the parameters of the trust. You can ensure they have a steady income stream in the trust while leaving the remainder of your trust to your children.
How to Develop Your Estate Planning Strategy
Before developing your revocable trust, you should first sit down with your family. You should discuss the following topics:
- Long-term goals
- Financial obligations
Write down a list of people you want to be named in your trust. You'll want to choose people who will serve as your agent if you pass away or are incapacitated. You also want to note who you want to receive your possessions and assets.
Think about how much money you want each person to receive. Consider your surviving partner's financial needs and the needs of your dependents.
Set Up Blended Family Trusts
Once you've figured out the above information, it's time to establish your trust. It's best to partner with an experienced estate planning lawyer for trust planning. They'll ensure that the process goes as smoothly as possible.
Choose Your Trustee
Who you select as the trustee for your estate is an important decision. This individual will be in charge of your assets in the event of your death or if you become incapacitated.
When you pass away, they're responsible for ensuring that your assets are distributed to those you chose. A lawyer, accountant, friend, or family member is typically a trustee. A professional Trust company can also be designated if you think you may face issues. The person you choose should have the following attributes:
- Financially capable
- Understand your family
You should also pick a trustee that you know your beneficiaries will respond favorably to. You'll also want to consider how everyone might interact together once you pass away, especially since it'll be an emotional time.
Powers of Attorney and Living Wills
A thorough estate plan will include a general or financial power of attorney, a healthcare power of attorney, and a living will. A living will outline what your medical wishes are if you are incapacitated.
A durable, general or financial power of attorney is the person who will be in charge of your financial affairs when you're unable to.
A health care power of attorney is the individual you want to make medical decisions for you.
Most people will choose their spouse to be their power of attorney. If you're in a blended family, it might be more complicated. You'll want to choose someone who's unbiased when dealing with your family members and who's also trustworthy.
You might have sentimental items that don't have any monetary value. However, these items might cause issues in your family after you pass away. Don't overlook these types of things when you plan your estate.
If these possessions are joined by both you and your spouse, and you each have children, you'll need to designate who will receive the items when you pass away.
If you and your spouse own your home jointly, the property will pass to the surviving spouse when the other passes away. If you own your home, it'll pass to whoever you designate in your trust documents.
A trust will help you avoid any issues surrounding disinheritance. This type of trust enables the surviving spouse to live in your shared home while remaining alive. Once they pass away, the house gets distributed to your trust beneficiaries.
Partner With an Experienced Estate Planning Attorney in Arizona
Thinking about a time when you won't be around your loved ones can be difficult. If you're in a blended family, it's essential to take the time to plan for everyone's future. A revocable living trust for blended families is a great option to ensure everyone is provided for.