• 07
  • February
    2011

Family relationships used to be simpler. At least it seems that way. There used to be parents and children, living in one household. Now, though, the American family is more of a web of relationships, and as a result, families handle their money and their estate planning differently.

Both divorce and having children without marrying have changed the family into a network of step-relatives. Over forty percent of adults in the U.S. have at least one step-relative. That is a much greater percentage than it was fifty years ago.

Blended families have become common. New family models have emerged from people starting second families later in life or raising grandchildren.

Because more than half of all first marriages end in divorce, and three quarters of all divorced people remarry, there are going to be many more blended families in the future. Around 65% of remarriages have children from a previous marriage.

Child support coming in or going out can affect a family's finances in a big way. It makes sense to ask a financial adviser about the current financial strategy, what insurance needs should be addressed, and what estate planning should be done.

Most people who remarry do not discuss finances before the marriage, even though money will be the number one source of stress in most marriages. One thing estate planners recommend is that new family units come to an agreement on how to handle money. One family's solution may not work for another.

Another recommendation is to make sure everyone is covered by insurance policies that you want covered. The same goes for a will. Make sure all children are covered, whether birth children, adopted children, or stepchildren, according to your wishes.

When it comes to estate planning, many individuals do not feel they have enough money to warrant planning. But considering the complexity of blended families, there may be more money than expected, and a harder-to-understand plan for how money should be distributed when you die.

Inheritance, custody, college financing and other issues all should be planned so that there is no conflict later about who is covered for what.

Plan ahead, also, for changes in the ex-spouses' situations. Plans that include contributions from them for children's expenses could change. How will you adjust your plan then? Or, worse, legal battles with an ex-spouse could change your financial situation.

Source: USA Today "Blended families require financial planning" 2/6/2011