Estate planning is one of the most sensitive elements when it comes to managing your finances. It can also be made more complex if you have a blended family or stepchildren to consider. Steve Wright, our Estates Director, explores the rise in the number of blended families needing Estates advice.
When it comes to blended families (usually referring to a couple, any children they’ve had together, and children from previous relationships) Estate planning can be an important, if complex, consideration. And in the last few years there’s been a significant increase in the number of modern families needing our advice.
New research from STEP, the global professional association for those advising families across generations, shows that almost two-thirds of advisers are finding that the majority of their clients are complex, cross-border, mixed-ethnicity and cohabiting families.
With this in mind, Estate planning for modern families needs to be approached carefully, to take into account numerous beneficiaries, and the potential legal and tax implications for families who live across different countries. There is also, of course, the need for sensitivity given cultural nuances, possible disagreements and some of the additional complexities which can come with divorce, re-marriage and more complex family relationships.
This isn’t helped by some legal frameworks around the world, which have failed to keep pace, and can present additional challenges due to outdated or inconsistent legislation relating to cohabitation, Powers of Attorney and cross-border tax.
As a result, there are some essential tools which can be extremely helpful for blended families. The first is ensure you have written a Will which sets out your wishes about how you want your Estate to pass on to your spouse, children, stepchildren and wider family. It’s important to keep this updated, and a good rule of thumb is to review it every five years or if your circumstances change; for example, if you divorce or re-marry.
Under your Will, certain trusts, such as Life Interest Trusts, can allow you to pass on your Estate to children from previous marriages, whilst providing for a new spouse. Specifically, a Life Interest Trust can allow you to use your Estate to deliver an income or allow the use of assets, such as a property, so that your new spouse is provided for during their lifetime. On their death the rest of your Estate then passes on to any children from your first marriage – a guarantee that your children will eventually receive their inheritance.
You may also find it useful to set up a Power of Attorney, so that you can nominate who you’d like to act on your behalf if you become unable to manage your own finances.
It’s clear that modern families each have their own characteristics, with more factors to take into account when it comes to any aspect of financial planning. If you are part of a blended family, with both your own children and stepchildren to consider, then good communication, early planning and open conversations about financial and Estate planning is very important.
We’ve been helping families for many years, and our expert teams across the globe can offer support and advice to suit you and your family’s unique circumstances. To discuss your Estate planning with one of our team please get in touch.
