Posted by Fletcher Accounting and Tax Service Inc.

Estate Planning Tips For The Modern Family

Estate Planning Tips For The Modern Family

A family structure has evolved from the traditional home of the father, mother, and one or more children under 21 living together in a house. There are also many other arrangements: single couples with children, mixed families, single parents, same-sex couples, and grandparents raising grandchildren.

Whether you live in a home as a single parent, same-sex partner, divorced, or live with your partner, the family is part of the new normal: a modern family.

With the evolution of the family structure, the financial needs of modern families have evolved compared to those of the traditional house. Financial advice is more complicated and is not always taken into account by consultants or family members. Sometimes, in mixed families, financial decisions tend to be unique, rather than shared among family members.

If you live with a non-status partner, you usually give up more rights than you earn. You are not entitled to old-age or social security benefits, and the transfer or bequeathing of assets can generate a tax bill that couples do not face.

Without a health policy, you are not the one who makes the standard decisions in the event of a health problem. And you do not have automatic rights to the property of the loved one and others in case of breakage.

Although divorce laws provide for the equitable sharing of property, single couples generally do not have the right to claim the property of others.

Here are some nontraditional estate tips to keep in mind:

Give rights to your partner: There are laws in place that allow spouses to regulate the disposition of assets in the event of death. The so-called "rules of intestacy" stipulate that property will pass to spouses and children or parents if someone dies without a child or spouse. But no law protects single couples or un-adopted kids. There have been reported cases of parents neglecting same-sex couples with their children in the event of death or disability. We can all use wills, trusts, standing orders, and health care authorities to choose who should fill in the gap for us when needed and who should receive our property in case of any eventualities.

Do not give out too many rights to your new spouse: Very often, despite the best intentions and goodwill, when a parent remarries, the new family rarely gets to bond. Children from previous marriages or relationships do not become friends with each other or a new spouse. Often, the death of a spouse means that all the assets of both families end up in the surviving spouse and end up passing to their children and grandchildren. Honest discussions about what the new couple wants and planning their development as planned can prevent many misunderstandings and resentments. Once again, wills, trusts, and health care powers can allow the new couple to choose the outcome they prefer.

Do not be afraid to talk about Prenuptials: Although most people entering the first marriage do not have children and few resources, this is not the case in the second or third marriage. Before remarriage, the couple should talk about what they have in mind about their mutual financial support between themselves and their children from previous marriages and relationships. Therefore, they must put their understanding in writing so that in the future, there will be no misunderstandings other than those agreed upon. If a prenuptial agreement concludes it, it will also be legally enforceable. If the circumstances change, the couple can always change accordingly.

Use trusts: Wills are usually direct and powerful tools. When one dies, your property passes on the people you name. Will do not easily allow for more flexible planning. For example, you can enable your new spouse to live at home for as long as you want but then ultimately pass the house down to your children and grandchildren. A trust allows you to plan this scenario by guaranteeing the rights of the spouse, but the other person, the trustee, the power to manage the property and protect it for the next generation. Or a couple could gather all their resources in a conventional relationship, for the benefit of their life, the funds remaining after the death to distribute them equitably to the children, each bringing a new relationship or a new marriage.

Objectives first, then planning next: No planning can be done in a vacuum or hypothesis without asking questions. Anyone planning to prepare for themselves and their loved ones, whether in a traditional or non-traditional relationship, should start listing their goals. You should be concerned majorly on how to take care of yourself, leave an inheritance for your kids, protect your spouse or partner, and ensure your children are independent. But what if they need a safety net? Of course, most of us do not have a single goal, but we should start writing to them all. So we can see if we can reach them all or if we need to prioritize. 

In short, the housing plan should reflect these goals and priorities. While this is true for estate planning, it is even more critical that we have family and non-family ties because the plan will need to balance and prioritize more interests.

Fletcher Accounting and Tax Service Inc.
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