Blended Family Estate Planning

Posted by Ned Armand, President of Eastern Point Trust Company on Dec 19, 2014

Estate planning can already be a daunting task.

But, estate planning for a blended family can be entirely distressing. Not having your estate in order for your blended family situation can send a wave of financial instability, familial strife, legal battles, and permanent damage washing over the quality of life of parties involved.

Blended Family Trust, Blended Family Estate Planning, Kiss Trust

Recognize the Facts

"What's in a name? That which we call a rose
By any other name would smell as sweet."
- Romeo and Juliet (II, ii, 1-2)
As romantic as the above quote is, Shakespeare’s Romeo and Juliet tragically provided us the insight that love is not enough. Relying on love or the good intentions of others for your blended family estate planning needs is a tremendously risky move. While Romeo and Juliet were not part of a blended family per se, the message stays the same, bad blood can plague houses.

A Bite at a Time

If you have a blended family, it is wise to have a plan for your final estate. Estate planning for blended families usually takes more time and thought than it would take for a more conventional family. This can act as a deterrent for some people, causing them to skip some steps in planning, but taking shortcuts may leave your estate unable to fulfill all of your intentions.

Make Time Well Spent

There are varying schools of thought on the “right” way to begin estate planning for your blended family, but very few people ever truly settle on the best way. Conventional methods include revocable trusts and a last will and testament. While good starting points, these methods fall short, and can be potentially ineffective in preserving the full intent of your final estate.

Bring your Estate Planning to the 21st century

Irrevocable trusts are the unsung hero of financial security in the modern era. These tools that were once out of the reach of the middle class are now readily available online at a low cost. You can now create a customized trust, tailor made for a blended family’s final estate, all from the comfort of home. In turn, bundled trustee services provide professional trustee oversight of the irrevocable trust, ensuring the funds will be used how and when you truly intended.

Not sure where to begin planning your final estate for your blended family? It’s easy. Download our FREE final estate assessment checklist below and get started today!

Download Your FREE Final Estate Assessment Checklist

Image Credit

Read More

Tags: Blended Family Trust

Advisor Series #2: Revocable and Irrevocable Trusts! Why Not Both?

Posted by Ned Armand, President of Eastern Point Trust Company on Nov 3, 2014

There is much misinformation and misconception surrounding revocable living trusts and irrevocable trusts.

Advisor, Irrevocable Trust, Blended Family Trust, Revocable Trust, Kiss Trust

Picking the Right Tool

At first glance, one could seemingly identify the main purpose of these trusts merely by observing their names. Revocable living trusts (RLT) are just that, revocable, and can be revoked and amended at any time by their grantor(s). Irrevocable trusts are irrevocable and cannot be revoked or amended by their grantor(s) (however, they may be amended by the trustee if provided for in the document).

10 Gallons of Water in a 5 Gallon Bucket

Often, revocable living trusts are used for tasks that they were never meant to achieve, such as managing the grantor’s assets after their death. Revocable living trusts are wonderful tools to manage assets of the grantor(s), avoid probate, and provide maximum flexibility during the grantor’s life. However, upon the first grantor’s death, the power left to the surviving spouse to revoke or amend the trust is a risk that can be abused.

Bring in the Ringer

Irrevocable trusts are a perfect second act to a client’s estate planning; the better design is for the RLT to “pour over” into the irrevocable trust after the first spouse (one of the RLT grantors) has died. Having an irrevocable spousal support trust established in advance to manage the assets after the death of the first spouse, will allow for the surviving spouse to be provided an income stream and assets to meet their needs. Additionally, the irrevocable trust protects the integrity of the deceased spouse’s intentions, and distributes the assets according to the language of the trust upon the death of the surviving spouse.

Let’s recap what we have learned;

  • RLTs are great tools for your clients, and should only be used for avoiding probate and providing flexible asset management during the lifetime of the grantors, but RLTs are often misused, and doing so introduces new risks.

  • The RLT should be designed to “pour over” its assets into the pre-established irrevocable spousal support trust. With this plan in place, the surviving spouse is provided for and both spouses’ intentions are protected from being altered by the surviving spouse (or their attorney).

  • Irrevocable trusts can be created as “sleeping trusts” which sleep awaiting the passing of the first spouse.

  • Finally, the use of an RLT as the sole trust in a blended family opens the door for even greater risk
Help your client's evaluate all of their trust planning risk factors by downloading our Final Estate Planning Checklist below.


Download Your FREE Financial Advisor Client Assessment Checklist!
Read More

Tags: Blended Family Trust, Irrevocable Trust, Inheritance Trust, revocable trust, Financial Advisor

A True Story: The Blended Family Folly

Posted by Ned Armand, President of Eastern Point Trust Company on Oct 31, 2014

BlendedFamily.jpg

Financial advisors know blended family situations are inherently complicated. Protecting the assets of any family is difficult enough, but when you introduce other marriages and children into the mix, it can turn routine estate planning into a nightmare.

The following is a real-life example of the toxic outcome of poor estate planning associated with a blended family.

The Blended New Family

Planning for the future, the husband and wife created a revocable living trust and placed their combined assets within it. The revocable living trust was to distribute all assets after the death of the latest living spouse, with half of the estate going to each spouse’s biological children (per capita).An advisor’s client had been married, had children, and then divorced his wife.The client later married another individual who had children from a previous marriage as well. The marriage never sat well with the children from either side of the family, and caused strife between the spouses.

The husband predeceased his second wife and the widow revoked the revocable living trust, and then replaced it with a will. In the new will, the widow stipulated that 100% of the assets (that were previously held in the revocable living trust) were to be given only to the children from her previous marriage, leaving her late second husband’s children with nothing. Regardless of his intentions, in the end, the second wife’s newly constructed will blocked the husband’s own biological children from receiving $2.2 million in assets.

The husband’s surviving children took this matter to court. Unfortunately, the judge ruled that since it was in fact a revocable trust, the husband had left his widowed wife the power to revoke the trust. The wife’s power to revoke the revocable living trust was thus upheld.

It’s Not Always Happily Ever After

While the damage is now permanently done, this could have all been avoided had the advisor guided the couple into setting up a blended family irrevocable trust. Once assets are placed in an irrevocable trust they cannot be removed, unless they are being used for the specific purposes the grantor of the trust intended. With this level of control, the spouses could have created a steady source of income for the surviving spouse, stipulated how much of the assets held within the trust each set of  children would receive, and they could have even gone so far as to stipulate when and how the children could use the assets.

Additionally, they could have selected an independent professional trustee with fiduciary experience to oversee and manage the irrevocable trust and its distributions. This would have further guaranteed that the terms of the trust were followed and ensured the distributions were provided according to the intentions of the grantor(s). 

A Lesson Learned

Blended families have special estate planning needs and risks. The possibility that your client’s spouse would cut their deceased partner’s biological children out of their estate after your client’s death is a harsh reality to face, but a reality none the less. Leaving the planning and distribution of your client’s assets until after their death is ill-advised. Advisors and clients alike can look to the low-cost, turnkey trust creation platforms that exist online today to assist in solving blended family financial planning problems.

Download Your FREE Financial Advisor Client Assessment Checklist! t

Read More

Tags: Blended Family Trust, Irrevocable Trust, Financial Advisor

Understanding the Blended Family Trust

Posted by Ned Armand, President of Eastern Point Trust Company on Oct 20, 2014

How to protect your estate 

New Beginnings

Remarrying creates distinctive challenges for both financial and estate planning. 

New couples may have children from prior marriages, and/or children together. In addition they may bring their own property and assets into the relationship. 

medium_14048647451

Challenges Arise

A big challenge with financial planning for blended families can be providing support for your new spouse's ongoing living requirements, while you ensure that your remaining assets will ultimately go to your children. 

Hoping your current spouse and children will "work it out" after your death is not a reasonable plan. The good news - a Blended Family Trust is the perfect resource to solve the problem. 

Everyone is Different

Blended families need a financial and estate plan that fits their unique situation. Without a Blended Family Trust you have no way of making sure that what you want to happen will actually happen. 

Wishes often change based on which spouse is the first to pass away, so review each possible scenario. 

Also, be sure you update all beneficiary designations on your insurance policies, IRAs, 401ks or other retirement accounts. It is easy to forget to update your beneficiary designations into the trust! 

Plan for the Road Ahead

Leaving your assets to the surviving spouse with no limits on the changes they make after your death, is not the wisest approach. Learn about Blended Family Trust tools that can help you achieve your goals.

Without a family trust designed for blended families, you have no assurance that your children will ultimately receive their full benefit from your estate. 

Solutions

As a result, blended families often use Blended Family Trusts to provide support for a spouse, while ensuring the children receive their fair share of the remaining property. 

Keep reading here for even more information on using a Blended Family Trust

Download Your FREE Final Estate Assessment Checklist

Image Credit

Read More

Tags: Blended Family Trust, Estate Planning

Blended Family Trust Solutions

Posted by Ned Armand, President of Eastern Point Trust Company on Oct 8, 2014

Tom Clancy’s blended family is facing Clear and Present Danger while they fight over his estate. 

Failure to properly plan and construct Tom Clancy's blended family’s trust has caused family tensions and looming legal battles. Wealth Management Magazine commented on the subject:

Blended Family Trust | Kiss Trust “Planning an estate for a unified, communicative family is a difficult-enough undertaking, but introducing variables like multiple spouses and half siblings puts enormous pressure to be clear and precise in the drafting language they use to avoid intra-family conflict down the line.”

Blended families have greater estate planning risks. 

For the traditional family, estate planning is usually accomplished by both spouses with coordinated and shared objectives. However, with a blended family there are often competing interests and interfamily rivalries that demand a new approach to planning that balances each spouse's interest.

With up to 50% of marriages ending in divorce the rates of blended families have risen, so too have the planning issues associated with blended families. Often the wishes of the dying spouse are subordinated by the surviving spouse, usually to the detriment of the first spouse’s heirs. 

A blended family trust can be a solution. 

A properly constructed blended family trust is a powerful tool to ensure the wishes of both spouses are preserved and that future changes will not benefit one set of heirs at the expense of the other set.

Family members as trustees can be a mistake. 

Also, having an experienced institutional trustee is a key element to ensure that the terms of a blended family trust are enforced uniformly. In particular with a blended family estate trust, non-professional or family member trustees often succumb to their family biases in administrating the trust. This may lead to the original intent of the trust not being properly fulfilled.

Benefits of a blended family trust. 

A properly constructed blended family trust can be a powerful tool that:
  • ensures the wishes of both spouses are fulfilled

  • prevents future changes that would benefit one set of heirs at the expense of other heirs

  • reduces family strife and avoids family-on-family litigation

Using a trust designed to address blended family estate planning issues, like a Kiss Trust, can avoid the many pitfalls of blended family estate issues. 

Download Your FREE Final Estate Assessment Checklist  

Read More

Tags: Blended Family Trust, Estate Planning

Kiss Trust

Creating a Trust
Has Never Been Easier

Kiss Trust is the only patented total trust solution in America. Kiss Trust Is a self-help trust creation tool with integrated trustee services and access to over 5,000 mutual funds, 1,000 ETFs and a brokerage account with stocks and bonds. Kiss Trust lets you create a powerful custom irrevocable trust without the expense and trouble of hiring an attorney.

Subscribe to Email Updates

Hours & Info

PO Box 536
Warrenton, VA 20188

540-347-6620
8:00 AM To 4:00 PM EST