4 essential estate planning steps you should take if your family is blended
If you’re part of a blended family, it can make some decisions more complex, especially when you start to consider how to pass on wealth and provide for the people that are important to you. Don’t ignore the potential challenges, as being proactive could improve the financial security of you and your family.
Data from the Office for National Statistics estimates that around a third of families are blended. It’s becoming more common for people to remarry, have children from a previous relationship, or play an important role in the lives of stepchildren.
Despite it being something a third of families need to consider, it can still make long-term financial planning more complex. A tailored financial plan can help ensure that your assets would be distributed in a way that suits your wishes.
Among the steps you should consider taking are these four.
1. Clearly set out your goals
It’s difficult to make suitable financial decisions if you aren’t sure about the outcomes you want to achieve. So, your first task is to clearly set out your goals – who do you want to support financially now or in the future? What are your biggest concerns?
You should consider what you’d like to happen in different scenarios to ensure all beneficiaries would be covered.
A chat with your partner, children, or other people that may be involved in your estate plan could be useful here.
2. Consider how you hold property with your partner
Your property is likely to be one of your largest assets, so it’s essential you understand who owns the property and what would happen if you passed away.
If you own the property with your partner, there are commonly two ways it can be held:
Joint tenants: If you pass away the property would automatically go to your partner.
Tenants in common: Your proportion of the property would go to your beneficiaries when you die.
Deciding who you’d like to inherit your property can be difficult, but it’s important.
If you have children from a previous relationship and want to pass on property wealth to them, tenants in common could suit your needs. However, you may also want to take steps to ensure your partner could remain living in their home during their lifetime, which you can include in your will.
Depending on how you share assets with your partner, you may also want to review how savings, investments, and more are set up.
3. Review your current will
Writing a will is the only way to ensure assets are passed on according to your wishes. As your circumstances or plans may change, it’s a good idea to review it every five years and after major life events.
One important thing to note is that getting married would revoke a will you’ve previously written. So, while you may have a will stating that you’d like your children to be your main beneficiaries, this wouldn’t be binding if you remarry.
While you can write your will yourself, seeking legal advice is often useful, especially in blended families where wishes are often more complicated.
You can use your will to set out who you’d like to inherit certain assets or a portion of your estate. As mentioned above, you could also specify things like your property will go to your children, but your partner must be able to continue living there until they pass away.
4. Consider if a trust could suit your needs
A trust allows you to have more control over how an asset is used and passed on. They can be a useful way to create long-term financial security for loved ones and ensure your wealth remains with your family.
You may choose to place assets in a trust on behalf of a child, who would be able to access them once they reach a certain age. Or you could set up a trust to provide an ongoing income for your beneficiaries, but they wouldn’t be able to sell the assets it holds.
There are several different types of trust and many different ways to use them to support your goals. If you are considering using a trust to pass on some of your wealth, taking both financial and legal advice can help you choose the option that is right for you.
Involving your family in the financial planning process could be valuable
When you’re creating a plan to ensure your family would be secure, communication is important.
It can help ensure your loved ones understand your wishes and that you’re all on the same page. It may also be important for your family’s decisions. For instance, knowing what they stand to inherit could change the steps they need to take to be financially secure in the future.
So, involving your family in the financial planning process can be valuable. That doesn’t mean you have to share all the details of your financial plan with them if you don’t want to. However, an open conversation about money and goals can be useful for everyone involved.
If you’d like to discuss your finances and how to create financial security for your family, please contact us.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate will writing or estate planning.