A lot of people put off estate planning because they think that they don’t need anything more than a simple will to distribute their assets to their spouse and their children. While this may be sufficient in some circumstances, in others it may fall short of achieving the outcome that you want for your assets and your loved ones.
This is especially true if you live in a blended family. Foregoing estate planning in these situations can be risky, and for a number of reasons.
For example, if your spouse has children from another relationship and you pass away without an estate plan, then, under Alaska law, your spouse will inherit the first $150,000 of your estate plus half of everything else.
The rest will go to the children that you share with that spouse. If you have children from another relationship, then your spouse will inherit the first $100,000 and then half of everything else. The rest will go to your children from all relationships.
Why intestate succession is problematic
This sort of inheritance structure can pose a lot of problems. To start, your spouse is under no obligation to leave his or her assets to your children from another relationship. This means that once your spouse inherits from you, he or she is free to pass those assets down as he or she sees fit.
In other words, your hard-earned assets may end up being passed down your spouse’s family line, which may leave your children and grandchildren without the support that you intended for them.
Intestate succession can also create a lot of family drama, with your spouse and children fighting over which assets should be inherited. This is especially problematic when your assets are tied up in property rather than cash.
Disputes over inheritances can ruin relationships that were once strong.
What can you do to protect your assets and your loved ones?
If the thought of intestate succession has you stressed, don’t worry. Instead, you should get prepared. After all, there are effective estate planning strategies that you can utilize to protect your estate and your loved ones. These include:
- Creating a remainder trust: One way to ensure that your assets reach those who you intend to support is to create a remainder trust. Here, your spouse will inherit a specified amount or will be paid a specified amount from a trust over time, but then any assets remaining in the trust will be distributed to other named beneficiaries once your spouse passes away.
- Gifting assets during your lifetime: Another option at your disposal is to give away assets while you’re still alive. You can give away more than $15,000 to each person per year without suffering any tax consequences, which is a great way to reduce the size of your estate, reduce taxation, and see your loved ones enjoy the gifts that you’ve given them.
- Creating multiple trusts: The great thing about estate planning is that the process is customizable to suit your needs. To achieve your goals, you can create multiple trusts with differing beneficiaries and for different purposes. This can ensure that your estate plan is more holistic and meets the goals that you’ve laid out.
Do you need guidance in creating your estate plan?
If you want to do estate planning right, then you need to be diligent and comprehensive. This means knowing your estate planning options and utilizing those that will benefit you and your loved ones most. If you’d like to learn more about what that looks like, then you may want to consider reaching out to a legal professional for help.