Blended families are becoming increasingly common as second and subsequent marriages often bring children from previous relationships with them. While blended families often operate seamlessly, they also may attract several legal complications that, unless they are addressed early through estate planning, could lead to resentment and disappointment later.
Colorado is an equitable distribution state, which means that in the event of a divorce, marital property will be divided fairly, although not necessarily equally. In blended families, this can present additional challenges, particularly if either party has accumulated significant assets or has business interests that may complicate proceedings.
To guard against such complications and ensure the well-being of all family members, here are some proactive measures you can take to futureproof your estate and finances before entering into a second or subsequent marriage.
Prenuptial agreements
Prenuptial agreements are signed by both parties prior to entering into marriage. They are legal documents that set forth each party’s expectations and obligations in the event that the marriage ends in divorce or death.
They provide a defined framework to addresses the complexities that often arise when individuals remarry, bringing with them existing assets, inheritances, or children, or when either party wants to protect themselves against the harmful financial effects of divorce that they may have previously experienced.
Prenuptial agreements allow these conversations to be held when both parties have had time to consider their options so they can discuss their preferences prior to entering into a legally binding relationship. They help couples achieve peace of mind and clarity, enabling them to enter into their new marriage with a positive outlook.
Trusts
Placing assets in a trust can safeguard them against intestacy laws, therefore ensuring that the assets will be distributed to an individual’s children in the event of their death or divorce [1]1.
When assets and finances are placed in a trust, they are exempt from probate and can minimize inheritance taxes that would ordinarily be payable on large estates. Trusts are not suited to every circumstance, but they are useful for people who want to protect wealth acquired prior to their second or subsequent marriage from the state’s intestacy laws.
Estate planning
Poorly drafted or incomplete estate planning documents — or the complete lack of estate planning documents altogether — present a significant risk: the unintentional disinheritance of children from previous relationships. To ensure assets and finances are distributed in accordance with your specific wishes, your wishes must be formally recorded in your estate plan or in your last will and testament.
These documents allow you to define how your assets would be divided in the event of your death, rather than relying on intestacy laws, which would favor your new spouse and children from your current marriage over any children from a previous relationship.
By clearly defining your wishes and beneficiaries in a last will and testament or estate plan, you can provide for all of your heirs, minimize disputes, and provide your family with clarity.
Power of attorney
By assigning a trusted individual power of attorney [2]2 over some or all of your major life decisions, personal affairs, and professional interests, you can ensure that your wishes will be carried out even in the event that you become ill or incapacitated and are no longer able to express your preferences.
Estate planning for blended families
When you work with a family law attorney to undertake estate planning, they will ask you to clarify how you want your assets to be divided among your spouse, children, and stepchildren; what should happen to your assets should your spouse remarry after you die; whether you want for your children to inherit your assets immediately after your death or after both you and your spouse die; and whether you want for significant assets, such as property, to pass to your children or to your spouse upon your death.
It is important to understand that good estate planning is not a sign of distrust; it is a guarantee that all of your family members have been considered. It allows you to express your desires, protect your children, and enter into a new marriage on sound financial footing.
To take the first step toward long-term financial security for your blended family, contact Lewis & Matthews, P.C. to begin the estate planning process. We look forward to helping you to establish a happily blended family with all of the appropriate safeguards in place.
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