Blended families face a particular toxic probate problem. A blended family is a family which one of the spouses has a child outside of the marriage. Without proper estate planning, a blended family WILL face significant financial difficulty upon the death of a spouse. In this video we?re going to explore what a man needs to do to protect himself and his family in case he passes away. NOTE: This presentation is for only the State of Texas, while other states laws may be similar, the author makes no representations about any State law other than the State of Texas.
Children are the victims of poor estate planning. In today?s world, it is difficult for children to make it without financial assistance from their parents.
Blended families are faced with a unique problem. Who do you pass your property to? Do you pass it to your children to make sure they receive an inheritance or to your spouse to take care of your children?
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The first step in analyzing that question is to understand how your family is structured. In this demonstration, Doug had a son Josh from his first marriage. Doug was divorced a few years later; and after six years being single, he married Sally. Sally and Doug had a daughter, Rebecca.
The second step is to understand what will happen if Doug does not get a will. The majority of Doug?s property will not be passed to Sally. His property will pass to his children.
In this situation, Sally is faced with a significant financial problem. She has lost Doug?s income and now is forced to give Josh and Rebecca the majority of Doug?s estate. This problem can result in Sally filing bankruptcy and losing the family home.
In the State of Texas, we follow community property rules. That means, if you are married, your spouse owns half of the assets and debts. While not all property of a married couple is community property, everything earned during the marriage is community property. Upon the death of Doug, all of his community property will pass to his children. Sally will get to keep her half of the community property and Sally would only get 1/3 of Doug?s separate real property.
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Estate planning is needed to help Sally keep the finances afloat while transitioning the family to a life without Doug. In addition, Josh is the odd man out of this situation. He is not Sally?s son and he just lost his father. Josh should receive some kind of inheritance to help him until he is an adult.
Some people expect their spouse to take care of their children after their gone. While this is a noble concept, in really is not practical in the real world. The odds are after Doug passes away that Sally will meet someone and get remarried.
While Sally may have intended to leave an inheritance to Josh, Sally and her new husband might have financial difficulty of their own. In that situation, she would need to leave her estate to her new husband to help pay for his retirement. It is almost certain, Josh will not be in Sally?s new husband?s will.
This is exactly why Josh should inherit at the time of Doug?s death. In addition, Josh should inherit money. Most people can?t afford to leave cash to their kids; so a life insurance policy should be taken out for Josh?s benefit.
Changing gears for a moment, the next issue we face is what do you need to do to take care of yourself. In our example, Doug should have some documents to take care of his needs in case his becomes incapacitated.
Everyone should have a medical power of attorney designating a loved one to make health care decisions for you when you are unable to do so yourself.
In addition, a power of attorney should be drafted to handle your financial affairs if something were to happen to you.
A DIRECTIVE TO A PHYSICIAN, also known as living will, instructs a doctor on what he should do if you are in a terminal or irreversible condition. This is a simple document which has a significant impact on your life.
We leave behind a lot of things when we pass. Some things have real value to us. Like a pet or the family home.
Fido, the friendly family dog, will most likely be put to death upon the death of its owner. Most people do not want that to happen. A pet trust can be set up, leaving money for the benefit of a pet allowing a person to have the financial means to take care of your pet.
In Texas, a probate can be avoided if a person creates a living trust. The single most important asset to place in the living trust is the home. If a home is not placed into a living trust, then the property needs to pass through probate to establish ownership.
We hope you enjoyed this presentation. The main point to take away from this presentation is that a blended family MUST get an estate plan. The Willingham Law Firm is dedicated to the estate planning of an average family. We offer the $199 will to help middle class families get their estate planning done. If you are a blended family, give us a call at 214-250-4407 or email me at taylor@taylorwillingham.com.
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