Financial concerns for HNW blended families

For high net worth (HNW) couples, estate and financial plans can easily become complicated due to the level of assets and complexity that comes along with wealth management. Imagine now if you add in another multifaceted element – blended family members. According to the U.S. Bureau of Census, “over 50 percent of U.S. families are remarried or recoupled.”

Take Mr. and Mrs. Smith for example – an elderly couple who remarried later in life and both have adult children from previous marriages. What if Mr. Smith doesn’t want to pass his inheritance down to Mrs. Smith’s biological children? What if Mrs. Smith passes away and her Will never specified that Mr. Smith gets the lakefront home that she bought before they tied the knot?

HNW blended family scenarios can often create murky financial planning situations. So how can couples, and their families, get on the same page toward future financial success? Let’s use Mr. and Mrs. Smith to help paint the picture…

One of the best conversations that Mr. and Mrs. Smith can have — as early on in their relationship as possible — is how to handle their finances from checking and savings accounts to investment and property. It’s important to understand that it’s OK to have “yours,” “mine,” and “ours,” especially because of the complications that can arise. What if Mr. Smith owes child support from his previous relationship? If Mrs. Smith has her own account, or some separated funds, her income can be independent of Mr. Smith’s financial priorities. Having a handle on accounts, and an open conversation of money flowing in and out, will help to keep things allocated in a second marriage with blended family.

Another element that Mr. and Mrs. Smith should keep in mind early on, and throughout their relationship, is the proper titling of assets and beneficiaries across their blended family. Wills, Power of Attorney and any other estate, medical or financially-binding documents should be reviewed and updated annually, or when a life change occurs (such as marriage, divorce, birth of new child, etc.). It’s also imperative to have very transparent conversations with one another, and with family members as to your wishes and how you want the estate to be settled at the time of death.

When it comes to these conversations, it can be tricky to incorporate the blended family members, especially if inheritance plans and the passing of assets/property won’t necessarily be equal. Hold annual meetings and make sure all members understand estate and financial plans so that individuals can avoid being “blindsided” by intentions. If concerned about “drama” that could arise, hold separate meetings – for example, Mr. and Mrs. Smith can have a private meeting with his biological children, and then have a secondary private meeting with her biological children. This way, none of the stepchildren will know what the other is getting, but they will know that they are all being taken care of.

Overall, when it comes to HNW remarried couples and their blended families, the best approach is open and frequent dialogue about plans and intentions, and having a strategy in place that works individually, for the couple, and in turn for the extended family members.

Nathan Boxx, Bradley Newman, Jason Seltzer

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