Taking Care of Stepchildren Through Estate Planning
California’s intestacy laws only apply to people who die without a will. If a Californian has stepchildren they wish to provide for, they can do so through estate planning by:
Drafting an enforceable will.
A will is a simple mechanism to bequeath an inheritance to loved ones. However, wills are still subject to probate, and when assets are subject to probate, they can be taxed, claimed by creditors, or otherwise publicly contested.
Giving lifetime gifts.
Sometimes it can be beneficial to gift an inheritance while still alive. An individual may choose to help their stepchildren purchase a home or finance their education. Lifetime gifts also have the benefit of reducing the value of an estate, thereby lessening any potential wealth or inheritance taxes.
Designating beneficiaries.
Stepchildren can be named as beneficiaries of life insurance policies or payable-upon-death accounts.
Creating a trust.
Trusts are among the most flexible estate planning mechanisms. Any assets transferred into a trust become non-probate assets. Trusts have an additional advantage: they can be conditional, meaning that any funds or assets placed into one may be disbursed only under certain circumstances such as when a stepchild turns 18 or needs money for college.
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