If you, your spouse. or both of you are in a second marriage, estate planning may be a little more complicated. You and your spouse may have brought previous children and previous property into your marriage. There may also be joint children and property to consider. Such circumstances offer a variety of concerns, but with proper planning, you can navigate these tricky conditions.
Make a List of Inheritances
First, you should make a list of any special inheritances that you wish to leave. Prioritizing your inheritances can help you to make sure the proper loved ones receive the correct items. Even if an item is only valuable for sentimental reasons, a family member may be disappointed if he or she does not receive that piece.
Speak with Your Spouse
You should also speak with your spouse about inheritances for your stepchildren and shared children. Your spouse may have special items to leave to his or her children as well.
Consider Various Scenarios
When planning your estate, you must consider what will happen if you pass away first, if your spouse passes away first, or if you both die at the same time. In all of these cases, guardianship and inheritances must be considered.
If you decide to go with a simple reciprocal will where all items are left to your spouse and vice versa, then either set of children could be disinherited. If you pass away first and your spouse inherits everything, he or she may not fully understand the legacy you wish to leave to your children. Your spouse could even disinherit your children by only naming his or her offspring as beneficiaries or by having a reciprocal will with a future spouse.
Use Tools to Protect Inheritances
In a blended family, it is important to protect the inheritance of each family member. You can do so with special tools such as irrevocable trusts. These trusts also provide estate tax relief and asset protection.
An incapacity plan is a vital part of your estate plan. It allows you to dictate your medical wishes in case you become mentally disabled. It can also help you avoid a court-ordered conservatorship. There are three types of documents used for incapacity planning.
Health Care Directives
An advance medical directive or durable medical power of attorney enables you to name a health care agent. The “durable” designation is significant, because a power of attorney that is not durable would no longer be in effect if you were to become incapacitated. Your agent can speak with your doctors about your state of health and make decisions for you when you cannot. However, doctors are not allowed to release medical information to anyone other than the patient under the terms of the Health Insurance Portability and Accountability Act of 1996. In order to allow your health care agent to make decisions on your behalf in an informed manner, you should add a HIPAA release form that will give doctors permission to share this information with the representative that you name in your durable medical financial power of attorney.
A living will is a health care directive that is used to state your medical preferences. You can advise of your beliefs on life support, terminal treatment, or any other medical care that you wish to mention. Your doctors and health care agent will use your living will to assist them in making decisions on your behalf.
Financial Power of Attorney
A financial power of attorney (POA) allows you to name an attorney-in-fact. This person can handle your financial affairs if you ever become unable to take care of them yourself because of incapacitation. There are two types of financial powers of attorney: durable and springing. A standard durable power of attorney is in effect as soon as you sign it. This allows your attorney-in-fact to act for you at any time, which is helpful for those who travel frequently.
If you only need a power of attorney for disability purposes, you may prefer to sign a “springing” durable POA. This document only goes into effect once a doctor has stated you are mentally incapacitated.
Attend a Free Seminar!
Our trust administration attorneys go the extra mile to provide educational opportunities to members of the community here in the Mount Clemens area. They hold estate planning seminars on an ongoing basis, and there are several dates coming up in the near future. You can learn a great deal if you attend the session that fits into your schedule, so we urge you to take advantage of this opportunity. To see the schedule and obtain registration information, visit our seminar schedule page.