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Estate Planning Toolbox for the Blended Family...

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Estate Planning Toolbox for the Blended Family…

? The prenuptial agreement — A prenup that separates intended spouses’ financial assets will protect against claims by either spouse on the other’s assets in the event of divorce; and, at death, insure that personal assets pass to each spouse’s respective children or other intended beneficiaries.

? Beneficiary designations — When conducting fact-finders, advisors need to review estate planning documents for potential conflicts. Among these: the prenup, will, living trusts, life insurance policies and individual retirement accounts.

? Life insurance — Life insurance is a primary funding vehicle used for estate equalization. When placed inside a wealth replacement trust, a policy can provide death benefits free of estate tax. Insurance can also be used to facilitate charitable objectives via a charitable remainder trust.

? Non-qualified deferred annuity — Uninsurable clients should consider purchasing a non-qualified deferred annuity to fund estate planning objectives. When the client dies, the spousal beneficiary can take ownership of the annuity, maintaining the tax-deferred treatment of the accumulated cash value; or start taking income.

? Revocable living trusts — RLTs are widely used by blended family couples to transfer property to beneficiaries while guarding against lawsuits by ex-spouses or other heirs that frequently plague will-based estate plans. Inside the RLT, credit shelter and QTIP marital sub-trusts are set up.


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