Planning for Blended Families in Colorado

Life is a book with many chapters, and sometimes, those chapters involve the end of one marriage and the beginning of another. New beginnings and the blended families they create can be wonderful, but they also can be complicated, and carry the potential for disputes. This is especially true when it comes to estate planning.

A blended family creates a number of potential logistical issues for estate planning. If your previous spouse were to remarry, for instance, how would you safeguard your children’s inheritance and keep it out of the hands of the new spouse? If you remarry, you may find that you want to treat your biological children and your stepchildren differently in your estate plan. Without an updated plan, you may create a situation which lays the groundwork for an expensive will or trust contest. This reduces the assets available for all heirs and beneficiaries.

For these reasons, the new beginning of a blended family should be accompanied by deliberate, detailed estate planning customized to meet your goals and the needs of all family members.

Safeguarding Your Family, Protecting Your Assets

There are several things you should do in order to make sure that, in the event of your death, your assets go to the people you intend to have them. The first is that, within the limits of your divorce decree or agreement, you should remove your ex-spouse from your estate plan. If you have children together, there are ways to provide for them without leaving assets directly to an ex-spouse.

One of the best and most common is the establishment of a revocable living trust. This allows you, the grantor or trustmaker, to control the assets in the trust while you’re alive, and specify who will receive the assets after your death. While you’re alive, you can change or even terminate the trust. Unlike a last will and testament, which leaves assets outright to heirs, a trust allows you to put conditions and protections on distributions. These include “spendthrift” clauses to protect a child’s assets from indiscriminate spending or creditors, and discretionary distribution language that earmarks assets for certain purposes, such as to pay for education.

A type of sub trust commonly used in second marriages is the QTIP, or Qualified Terminable Interest Property trust. This type of sub trust provides income for a surviving spouse to live on while preserving all or most of the principal for the grantor’s intended beneficiaries, often adult children from a first marriage. A QTIP allows you to have the peace of mind that your spouse will be provided for, and allows your children to be secure in the knowledge that you have considered their future as well.

Comprehensive Colorado Estate Planning for Blended Families

Trusts are not the only estate planning tool to consider when blending families. Don’t forget to update powers of attorney, revoking any previous ones and naming your new spouse or another person of your choosing as your intended agent. Similarly, advance health care directives should be updated, giving your new spouse (or another person) authority to make medical decisions for you if you cannot make them for yourself. After all, it’s unlikely that you want your ex-spouse to have power over decisions affecting your life and death!

In addition to powers of attorney and health care directives, don’t forget to change beneficiary designations on insurance policies, retirement plans, and other accounts. Failure to change these designations may result in an incorrect payment and litigation involving Colorado’s divorce revocation statute.

A knowledgeable Colorado estate planning attorney can help you make sure you’re not overlooking anything when it comes to planning for your blended family. Contact the experienced estate planning and probate attorneys at Davis Schilken at 303-670-9855 to arrange a consultation at one of our two locations in The Denver Tech Center and Golden, Colorado. Our attorneys can address your concerns, identify your goals, and explore your options for protecting all the people you love in the next chapters of your life, and beyond.