Blended families are a reality in today’s society, and estate planning needs to address the complexities that are faced when families and assets are combined. There are several techniques that an estate planning attorney can recommend to address the specific issues of blended families. These estate planning tools include, but are certainly not limited to:
- Qualified Terminable Interest Property Trust: With this type of trust, assets are held in trust for the use of a spouse, who is entitled to receive income from the trust and make use of any trust assets, including the primary residence. The spouse is also allowed to spend trust principal to the extent that is allowed by the language of the trust. The grantor (the person who established the trust) names beneficiaries who will inherit the trust assets when the surviving spouse dies. For instance, his or her children, who may not be the children of the surviving spouse and would otherwise have no claim to the assets, could be named to receive the assets when both spouses are deceased.
- A two-part estate plan: An estate plan that accounts not only for benefit of the surviving spouse, but also gives a portion to the children of the deceased spouse, either outright or in a trust that takes advantage of federal estate tax exemptions.
- Lifetime gifts: Gifts are allowable and tax-free to a certain extent, and you have the added benefit of seeing the beneficiary enjoy the gift while you are alive. Each year you are able to give away money or property in the form of a gift that is nontaxable as long as it is below the gift tax exclusion amount. This amount is currently $13,000 if the gift giver is an individual, but for a couple who make gifts, the exclusion amount is $26,000.
These are just a few of the basic strategies for estate planning for blended families. As you can see, it can become a challenge to plan for potential conflicts, human nature and future needs when blended families are involved, particularly when there are children from previous marriages. Make sure you consult with an estate planning lawyer with experience in Ohio law and blended families if you are facing this challenge.