Will you be forming a blended family in 2015? If yes, then you are in good company. According to the Pew Research Center, four out of every ten American adults have at least one step-relative in their family. The study also found that adults “feel a stronger sense of obligation to their biological family members than they do to their step kin.”
Surprised?
Not really, this natural family tug is the tug of human nature itself.
Nevertheless, that tug can lead to some ugly unintended (and perhaps intended) consequences for couples who fail to address fundamental legal and financial matters before tying the knot.
Couples planning to blend families typically need to work out legal and financial arrangements that take into account previous relationships with ex-spouses and their families. Things can get complicated rather quickly.
In fact, as opposed to those couples marrying for the first time, you and your intended need to share legal and financial information to avoid unpleasant surprises later.
Fortunately, a helpful checklist of things future blended family spouses should consider comes our way from The Kenyon Leader. The article is titled “Yours, mine and ours: planning step-family finances.”
Here are some key areas you should address together, according to the original article:
- Current credit reports and credit scores. Significant loans, large amounts of debt, or bad credit for one or both partners can hinder future major purchases.
- Assets and liabilities. Both spouses should know each other’s financial assets and liabilities and any potential issues. Are there any debt and credit problems? What if one spouse has more extensive assets? Be sure to address how those will be addressed now and later when one or both spouses pass on.
- Legal issues. Disclose any issues involving divorce, child custody, foreclosure, bankruptcy, or other legal proceedings that are pending against either partner or family members.
- Business and estate issues. If there are significant estate or business assets assigned to children, former spouses, or family members, those commitments need to be considered in the context of the finances of the planned marriage or partnership.
While addressing these key areas, consider engaging an experienced estate planning attorney who has specific expertise with blended families and their unique issues.
Make A New Estate Plan. Without proper estate planning for your blended family situation, things could go south very quickly if either you or your spouse (or both) become incapacitated or die. Who will make your financial and health care decisions, let alone inherit your own assets? In the end, a failure to make proper plans may mean disinheriting someone you love.
But, who will you disinherit by your lack of proper estate planning? Will it be your new spouse ... or your own children?
In short, forming a blended family requires pushing the restart button on all of your legal and financial plans. The failure to do so can be disasterous for all concerned.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Resource: The Kenyon (MN) Leader (December 29, 2014) “Yours, mine and ours: planning step-family finances”
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