Orsbon & Fenninger, LLP

Estate Planning and Estate Administration

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Creating trusts in blended families

North Carolina couples who are creating an estate plan and who have children from previous marriages might be concerned about making sure that children are treated equally. For example, one woman married a man who had two daughters. In the original version of the estate plan, a trust was set up. The man owned two properties, and according to the terms of the trust, the home that the two daughters had grown up in went to them. His spouse would receive the other property. All other assets would go to the surviving spouse, and on the death of both spouses, all assets would be split 50/50.

However, several years later, the couple bought a new home and had a son. The couple decided to revisit the trust. The man's concern was that on the death of both of them, in addition to getting one-third of his father's part of the trust, the son would get the entire portion of his mother's trust. The mother felt this was fair, but the father did not.

Advisers who were consulted argued that while technically her assets belonged to her son, the way the couple commingled assets made the situation more complicated. They suggested an equitable three-way split, a conversation with the children about the plan and perhaps a life insurance policy for the son.

As this situation demonstrates, it is also important to periodically review and update an estate plan. All too often, failing to do so can mean that a second spouse and children from a second marriage get little or nothing. An experienced attorney can often be of assistance in this regard.

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