Law Outside the Box

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Generally speaking, in a “traditional” family setting, a spouse provides for his/her assets to pass to the surviving spouse.  The surviving spouse then provides for his/her assets to pass to their children.  In today’s world however, when it is the case that one or both of the spouses have been married previously and there are children from that prior relationship, the challenges of developing a consistent estate plan can be significant.

Two common estate planning mistakes I have seen repeatedly when representing blended families:

1 – Not having a will

When you do not have a will, you cannot automatically assume that the heirs and the Court will come up with the most-sensible solution.  In fact, children from a prior marriage or relationship may have statutory rights under the law to claim a portion of your assets and property.  Most estate planning attorneys would tell you the rules with respect to distributions in a blended family are very complicated in this regard.  A will allows you to clearly communicate your wishes and preferences and minimize the likelihood of confusion.

2 – Not updating your beneficiary designations

In general, your will does not handle distribution of the assets you own which have beneficiary designations.  Such assets would include 401Ks, IRAs, Life Insurance and Mutual Funds.  If you have not reviewed those beneficiary designations in many years, it is imperative that you know who is designated as a beneficiary.  

I have seen numerous situations where beneficiary designations had not been updated in 20 or 30 years and the people listed as beneficiaries were either individuals the client no longer wished to have as a beneficiary or else they were deceased already.  Thus, it is up to you to take the initiative and know your beneficiary designations.  Your estate planning attorney and financial advisor can assist you in taking the guesswork out of your estate.