The landscape of American families has changed dramatically in recent decades. This shift has led to more diverse and complex financial planning needs for many families in Texas. If done correctly, you may be able to protect your loved ones and assets more effectively than ever before.
Name your beneficiaries correctly
It’s vital to properly list beneficiaries to your bank, retirement, life insurance and investment accounts, ensuring to include everyone that’s important to you. If you name your spouse as the primary beneficiary and something happens to both of you, your children from a previous relationship could be completely left out.
Create or update your will
One of the essential estate planning documents for blended families is a will. This document allows you to designate how you would like your assets divided in the event of your death. If you die without a will, state intestacy laws will determine how your loved ones will inherit your properties, which could be the opposite of your wishes.
Also, as your family grows or as you gather more assets, consider updating your will accordingly. Failing to do so could result in conflict among your family, or the court could invalidate your will entirely.
Create a trust
A trust can help you control how and when your assets are distributed after your death. Basically, it works by transferring ownership of your properties to a trustee who then manages them according to your wishes. This can be an especially useful tool if you have young children from a previous relationship whom you want to ensure are taken care of financially until they reach adulthood.
Consider giving gifts while still alive
Texas has no gift tax, which means you can give any amount of money or assets to your heirs without incurring deductions from the state government. However, the federal government has a gift tax, which currently stands at $16,000 per year per recipient. You can take advantage of this by giving gifts of less than that amount to your loved ones while you are still alive. This can help reduce the size of your estate, which could lower the taxes your heirs would have to pay after you die.
If you have kids from previous relationships, it’s especially important to plan your estate as early as possible. This way, you can rest assured knowing that they will be looked after financially if something happens to you.