Financial Planning

Estate Planning for Blended Families: A Checklist for Keeping Your Plan Current

By 
Brian K. Peterson, CFP®, MBA
Hi, I'm Brian Peterson. As a life-centric financial planner, I'm focused on your peace of mind as much as (if not more than) your financial prosperity. The moment when I get to see my clients sit back, relax in their chair, and realize that they are going to be okay always fills me with a sense of duty, purpose and pride. Brian attended the University of Minnesota - Carlson School of Management and earned a Master of Business Administration - MBA and received a BA in Biology from the University of Montana.

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Estate planning is a complex process that is never fully finished. Life, law, and relationship changes all affect your estate plan. In a blended family, estate planning can be especially complex. Between ex-spouses, stepchildren, and biological children, navigating the allocation of assets, complying with legal requirements from divorce decrees, and ensuring the financial well-being of all involved parties requires careful consideration and strategic foresight. 

Many people avoid creating an estate plan because it makes them uncomfortable to think about their own mortality. But let’s take a step back for a moment and reframe what estate planning really is. Whether you’ve been blending for years or are just starting on the journey, it is likely you spend a lot of time with your family—time providing for, caring for, and loving them. Estate planning is nothing more than making preparations so that your family is provided and cared for when you are no longer able to. 

Why You Need an Updated Estate Plan

The truth is, everyone has an estate plan—either one they have carefully and lovingly tailored specifically for their family’s unique situation, or a one-size-fits-all “estate plan” imposed by their state. Some mistakenly believe estate planning is solely for the wealthy, but if you have any assets, property, possessions, or loved ones to consider, and wish to retain control over your affairs, an estate plan is crucial. Even if you own very little, it’s vital to plan for incapacity and end-of-life decisions so that your loved ones aren’t unnecessarily burdened. 

Even if you work with an estate planner and financial advisor, it is your responsibility to take an active role in making sure your plan is complete and up to date. With so many elements and moving parts, you may find it helpful to use a checklist for estate planning, particularly when it comes to reviewing your estate planning documents. 

Checklist for Estate Planning Documents

Your estate plan is only as complete, effective, and current as the documents you have in place. No matter your wishes or intentions, it’s critical that you have all of your desires in writing. Keep in mind that a will alone may not be enough to cover all of your bases. 

Below is a checklist to give you an idea of what may need to be included in your estate plan and the documents that may need periodic review. Note that this is a general list and is not intended to be comprehensive or exhaustive. The specific documents you’ll need to review and update depends on your unique circumstances and the laws of your state. Always consult with a trusted financial advisor and estate planning attorney.

Beneficiary Designations

Many financial accounts offer the option to designate beneficiaries, a process typically managed directly with the institution holding the account.

Common types of accounts where beneficiaries can be designated include retirement accounts, checking and savings accounts, life insurance policies, and annuities. This designation is often referred to as a “transfer on death” (TOD) for non-retirement accounts and, in some cases, for real estate documents where permitted.

It’s crucial to understand that beneficiary forms often take precedence over the directives outlined in a will or trust. For instance, if your will or trust stipulates that funds should go to your current spouse, but your beneficiary form designates your ex-spouse, the funds may be directed to your ex-spouse instead.

Last Will and Testament

A will is a legal document that distributes assets, appoints guardians, creates trusts, and appoints an executor of an estate.

Trusts

There are too many types of trusts to mention in this article. Many people think trusts are only used by the very wealthy to minimize taxes. But that’s only one of the potential benefits of using a trust. Trusts can also help you give more detailed instructions and purpose as to how, when, and to whom assets are distributed. In addition, trusts can provide additional privacy regarding your assets and how they are distributed, as opposed to a will, which becomes part of the public record.  

Trusts should be created with the advice of a knowledgeable financial or legal professional. Some types of trusts are irrevocable, meaning you cannot make any changes once it’s established. 

Power of Attorney

This document grants someone else the authority to make financial decisions on your behalf if you become incapacitated. You should work with your attorney to pick the right person and to set the scope of powers granted.

Healthcare Power of Attorney (Advanced Healthcare Directive)

This document allows you to appoint someone to make healthcare decisions if you are unable to do so yourself. It may include your instructions for end-of-life care as well.

Miscellaneous Estate Planning Documents 

In addition to the formal documents above, there are a few other areas you’ll want to cover as part of your estate planning. One area is your digital life. You’ll want to leave updated instructions for handling your digital assets, such as online financial accounts, social media accounts, email accounts, websites, blogs, photos, and other digital files. If you own a business, you’ll want to create a contingency plan for each of them so that the business can be closed down or transferred according to your wishes.

When You Should Review Your Estate Plan

Establishing an estate plan is just the beginning. Because your estate is continuously changing and the circumstances that affect your estate can shift over time, it is important to keep a close watch on your plan and make adjustments as needed. 

We recently assisted a client who discovered her ex-spouse was still listed as the beneficiary in several employee retirement plans, a decade after their divorce. It’s a reminder of the importance of staying proactive and regularly reviewing your estate plan to ensure it reflects your current intentions. Don’t rely solely on memory—this client thought she had changed everything years ago! Keeping your plan up to date is key to protecting your assets and loved ones.

Consider revisiting all documents, beneficiary designations, and transfer on death designations every three to five years, especially following significant life events like the ones below. 

  • Change in relationships: Marriage, death, health, aging children (no longer minors), birth of children, estrangement, or reconnection.
  • Change in state of residence: Each state has its own set of estate laws. Make sure your estate plan documents are still valid in your new state and consider having them reviewed by an attorney licensed to practice there.
  • Change in wealth: Inheritance, starting a business, or any other major change in your financial status. 
  • Change of heart: You’ve reconsidered how you want to address a particular issue within your estate plan.

Estate Planning Next Steps

Once you’ve updated your estate planning documents, it is good practice to let someone close to you know where they are or at least who your attorney and financial planner are. Also, notify anyone who is involved in your estate plans as a guardian, executor, trustee, etc. Consider having your attorney and financial planner maintain copies of your records. 

As you can see, there is a lot to consider when it comes to estate planning. It’s an ongoing process with many moving parts. To safely protect your wishes and legacy, it’s best to work closely with an estate planning attorney, financial advisor, and accountant.

If you’ve experienced any major life changes lately, or if it’s been a few years since you established your estate plan, it’s time for a review. Putting it off could mean your current wishes don’t get carried out. Reach out to us today to schedule a free consultation. 

This article reflects the insights and opinions of its author and is not a recommendation or endorsement of their views or services. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

About the Author

Headshot of Brian K. Peterson, CFP®, CPWA®, MBA
Brian K. Peterson, CFP®, CPWA®, MBA Planning Built For Blended Family Life

Based in St. Paul, MN, Endurance Financial Group is an Independent Registered Investment Advisor partnering with blended families to combine their household finances in a unified financial plan that works for all members of the family. They can be reached by phone at 651-605-2318 or online at efg-planning.com.

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Brian K. Peterson, CFP®, CPWA®, MBA | Endurance Financial Group

To make Wealthtender free for readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a conflict of interest when we favor their promotion over others. Read our editorial policy and terms of service to learn more. Wealthtender is not a client of these financial services providers.
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