Blended Family? Why a Revocable Living Trust is Right For You

My last article focused on how Revocable Living Trusts (RLTs) work to avoid (or at least mitigate) state and federal estate taxes. Beyond the dollars and cents, RLTs can also protect yourself and your loved ones in a variety of ways. This week I’d like to highlight how an RLT works to protect a “blended family.”

A blended family or step-family is often comprised of children who are natural to only one parent, and perhaps children that are natural to both parents. Blended families face many issues that the traditional “nuclear family” does not face. These issues include providing for the new spouse, providing for the children of the new marriage, and minimizing estate taxation.

In the absence of a Prenuptial Agreement to maintain separate assets, most spouses in blended families tend to combine their wealth. However, if you predecease your new spouse then you may forever disinherit your own children of their share of such blended wealth! With a traditional Will-based estate plan, wealth typically moves from the deceased spouse over to the surviving spouse, and at the second death down to the children. It is not uncommon in blended families for the surviving spouse to change their Will after the first death so that assets only pass to their natural children. Upon the death of your new spouse, your assets may be inherited by your stepchildren, or even by your new spouse’s next spouse and their children. I’ve seen this exact scenario play out many times.

A Revocable Living Trust can prevent this problem by carving out a specific share for your children that won’t automatically move to your new spouse upon your death. This ensures your children and loved ones will receive their inheritance.

Regardless of whether children are reared in a traditional nuclear family or in a blended family, great care should be given to protect any inheritance for them, and also from them. For starters, wealth representing a lifetime of your hard work and thrift can be squandered in very short order. Dollars earned just spend differently than dollars inherited! In addition to good old fashioned squandering, an inheritance can quickly vanish through divorce, lawsuits and bankruptcies. Proper planning can control where your assets go, and how they are used when they get there. This is especially important when planning for blended families and their unique needs.

If you would like to learn more about Trusts, including Revocable Living Trusts, Guertin and Guertin, LLC is hosting three Trust workshops: a Basic Trust Overview on Wednesday April 9th, Revocable Living Trusts on April 15th, and Irrevocable Asset Protection Trusts on April 24th. The workshops will begin at 6pm at our offices at 26 Broadway in North Haven, Connecticut. Please call 203-234-7400 to reserve your seat.