Estate planning for a California blended family can be a challenging to try to create something that is fair to both spouses and their children. A revocable living trust is one means of accomplishing that goal. This type of revocable trust becomes irrevocable upon the death of one of the spouses. The trust can be altered or revoked during a lifetime, depending on the grantor. After death of one of the spouses, the property is transferred pursuant to the terms of the trust.
The trust provides the opportunity to devise a plan to meet the needs of a blended family. If the home belongs to the husband, provision can be made to allow the wife a life estate in the property to prevent a situation where the husband’s children may try and have the wife removed after his death. Some states allow spouses to leave a life estate without a trust document.
IRAs are another instance that requires some thought. Maybe the spouse owning the IRA wants the surviving spouse to get the income from the IRA, but his or her children to get the principal on the other spouse’s death. Tax laws make it preferable to have the IRA pass to the spouse instead of the children. However, it is possible to do so using a restricted beneficiary form — a “gift with strings.” That way, the same purpose can be accomplished while also taking advantage of the free spousal rollover.
Blended families confront a myriad of estate planning issues, particularly in a community property state such as California. Those affected would profit by conferring with an attorney experienced in trusts and trust administration as they relate to estate planning. The lawyer can assisting in reviewing all of the relevant facts and circumstances and then out into legal effect the desires of the merged families.
Source: The Hitched, “Protecting your assets and heirs in a blended family,” Jean A. Dorrell, CEP, Nov. 9, 2011