Managing wealth fairly in blended families generates multiple issues that need addressing in an organized, consistent way to prevent hurt feelings. Blended families come together when divorced or surviving parents connect with a new partner regardless of whether they marry or not. Children from one or both parties make up the new blended family, which is a time for joy and celebration.
However, things don’t always follow “The Brady Bunch” formula. The kids might not be inclined to accept the new relationships, and many actively oppose sharing family wealth. Children often develop new jealousies based on their step-siblings’ accomplishments.
This blog post will explore ways to successfully manage wealth in blended families and the benefits of hiring a wealth management company. Whether your family is just getting started or has been blended for years, these tips will help you keep the peace and avoid financial conflict.
Steps for Successfully Blending Family Members
Children can be notoriously opposed to the changes necessary for blending two separate families. You shouldn’t attempt to force the previous family environment on either side of your blended family. Try to embrace the differences in family culture because it’s not possible to make the blended family a replica of either side’s previous relationships. Sure, there will be growing and adjusting difficulties, but that can’t be helped. Love and patience are the keys to success if you adopt the following suggestions:
- Work hard on your marriage to avoid communication problems. It becomes more difficult to adjust as a couple when dealing with child adjustment problems.
- Cultivate an atmosphere of civility to encourage sharing and empathy.
- Demand that family members respect other member’s opinions.
- Demonstrating empathy and compassion encourages greater acceptance from others.
- Foster an environment of transparency and communication where problems are discussed instead of being left to fester.
- Proactively discuss financial issues when children become mature enough to understand.
- Don’t initiate too many changes at once to prevent overwhelming children.
- Try to find family activities that both families can support in real-life experiences.
- Try to initiate changes in parental behavior before you remarry.
Failing to address or discuss the ramifications of a new family dynamic is a big mistake. Children will gradually learn to accept changes in their expected inheritances, financial assistance and financial resources. Springing negative information suddenly on family members is a recipe for disaster.
How to Deal with Some Specific Issues
It’s best not to spring a marriage on your children without giving them time to get to know your prospective partner. It’s also important to recognize that it’s common to experience difficulties coming to love your partner’s children. Other issues that might arise include:
- More Heirs: Blending a marriage often results in doubling or tripling the number of heirs to your combined estates. That creates personal and legal problems that should be resolved as quickly and painlessly as possible.
- Need to Redo Wills and Estate Plans: You need to redo your wills and estate plans immediately. Many people consider these actions before remarrying.
- Spousal Maintenance and Alimony: Both sides might have stay-at-home spouses who’ve been awarded alimony or spousal maintenance funds. These financial considerations often reduce incoming assets significantly, and they need to be considered in any financial planning.
- Child Support: Child support payment must be worked into financial planning, and blended families can certainly award assets to children for whom they don’t have exclusive custody.
Wealth Management in Blended Families
More than half of U.S. citizens can expect to be involved in a blended family at some point in their lives. It’s important to begin family planning immediately based on your changed circumstances.
Emotions become volatile when discussing wealth management issues, and the key to success involves careful planning where each member is provided a reasoned and well-considered inheritance. Discussing the financial consequences of a blended family should take place as quickly and as often as necessary. Major issues to be considered include:
- Initiating Family Discussions: You should hold an open discussion to discuss what each person wants in terms of expected obligations like college financing or a business stake or loan. Your discussion should also include issues like guardianship, family members’ long-term goals, possible annuities and other contractual financial arrangements like insurance.
- Compiling a Comprehensive List: Make a list of any family members that you and your partner agree should be named in legal documents including financial advisers and estate executors.
- Considering Each Person Individually: The best policy is to leave comparatively equivalent assets to each heir as an individual and award assets in areas of each person’s interest. Adult children with substantial resources of their own need not be left equal shares unless you choose to do so. You might choose to leave assets directly to a surviving spouse or other dependents.
Hiring a Wealth Management Company Benefits for Blended Families
The benefits of hiring a wealth management company as quickly as possible after blending 2 families include the following initiatives.
Creating a Financial Plan
The first and most important benefit of hiring a financial management company is creating a comprehensive financial plan based on your assets, income, blended family size and key information from a questionnaire. The plan will take into account your family size, assets, liabilities, net worth, personal and family member goals and critical access to working capital.
Setting Up a Trust
Setting up a trust for family members touches all the bases by guaranteeing a level of income for heirs on both sides of the marriage or domestic partnership. Establishing a trust provides irrevocable protection of your spouse during his or her lifetime and protection of children as documented in separate trusts in their names.
Choosing a Trustee
Choosing a trustee to manage your estate, including trusts, ranks as an important decision because the person named as trustee has extraordinary power over asset distribution and overseeing your investments. Trustees should be financially savvy, professional, trustworthy and familiar with family dynamics.
Managing the Family Home and Estate
Usually, your estate trustee manages tasks like protecting the family home, ensuring that any mortgage balances are paid and the home is assigned to your designated heir as intended. If you’re concerned that the family home will be sold against your wishes, your financial adviser can set up a residence trust, which allows your surviving spouse to live in the home until death, after which the trust can assign home ownership to chosen beneficiaries. The same holds true for other properties like vacation homes.
Protecting Family Assets
Protecting family assets becomes challenging when family dynamics often split into 2 or more camps. The best strategy is to confirm your estate plan with legal documents and transparent discussion of your intentions. You might consider assigning assets based on family connections as critical mementos that children can appreciate owning.
Arranging Family Trusts Including Marital Trusts
Family trusts are often arranged after the death of one spouse. All assets of the spouse are assigned to the trust, which gives the surviving parent a transparent view of all assets to facilitate distributing assets based on each child’s particular needs.
Marital trusts allow your assets to pass to your surviving spouse, but you can ensure that any balance not used during your spouse’s lifetime is divided among the children. These trusts allow both spouses to divide assets among surviving children of both sides.
Remembering to Apportion Personal Mementos Fairly
Many people who join blended families already have a comprehensive estate plan that was created during the previous marriage. Often, the former estate plan isn’t updated, and it needs to be. Some people simply leave all their assets to the surviving spouse with confidence that the spouse will divide the assets equitably among all the children.
Troubleshooting Second Marriage Inheritance Issues
Most second marriages involve older people who should already have developed a will and estate plan. Those plans need to be updated after any successive divorces or remarriages. Common issues involving second marriages include:
- Third or fourth marriages that are more common and often involve former spouses leaving all assets to their own children
- Commingled assets from previous marriages
- Spousal duty of care to provide long-term care for spouses
- Updating beneficiaries for life insurance and assets like stocks and bonds
Taking Advantage of Other Wealth Management Options for Blended Families
Other wealth management vehicles include life insurance, retirement benefits and gifting assets to specific family members immediately or under a “Pay on Death” provision. Gifts off the top are often awarded after death to provide immediate access to funds.
Nesso Wealth – Get The Advice You And Your Family Need
It’s important to consider all the aspects of your forthcoming decision to blend families in marriage or domestic partnerships. It’s best to discuss these decisions in advance with older children to give them time to adjust to the concept and possible decreases in their anticipated financial resources. Contact Nesso Wealth in Connecticut for the company’s experience and skill in troubleshooting these issues.
Our team members always act with the highest level of professionalism and integrity. They will be pleased to talk about your specific issue and come up with a solution that’s tailored to your requirements. When you work with us, you’re not only obtaining expert wealth management advice; you’re also taking a step toward feeling more confident in your entire life choices.