When families become blended, they often must make many changes. Some people may not consider their estate plans in that equation; however, that may be a mistake.
Not making adjustments after such a life-altering event could result in the misappropriation of some assets. To avoid this, there are a few important things to consider in order to create a proper estate plan for a blended family.
Power of attorney
The power of attorney designation is an important decision. This party works on behalf of estate holders when they are not able to. Therefore, the proxy should be someone or an organization that the estate holder trusts. Also, depending upon the size and nature of the estate, it may be beneficial to have different types of powers of attorney, such as:
- Health care
The proxies may be different entities or the same party. However, it is important that estate holders understand the requirements of the position to ensure that the designated party is able to fulfill the role.
If any beneficiary designations change, it is important that estate holders note this, both in the estate plan, as well as in any other policy. Some people may make the incorrect assumption that the estate plan trumps all other designations. In reality, if a policy allows for a standalone designation, the parties noted receive the benefits; therefore, it is important that estate holders make updates across the board.
As two people join in marriage, so do their assets. If parents desire to set aside certain assets specifically for their children, trusts are a great way to do this. Once in a trust, the assets are separate from the estate, which provides protection from possible division, liquidation or seizure from the recipient.
These are a few key considerations for estate plans for blended families. However, no two families are the same, so it is important for an individual to take some time to review the estate and available options to determine the best route.