23 September, 2019 Financial Planning

When Families Blend, Life Changes


It wasn’t that long ago when blended families were an uncommon family unit. Today, they now represent about 1 in 8 couples in Canada with children. When families change, so do finances. Here are some life-long things to consider.

These families come in various forms, with either one or both partners bringing their child or children to the blended family, and the new couple may add to the mix with another child of their own.

Life changes in many ways as new family members become accustomed to living together under the same roof. Even the house itself will be different for some or all of the blended family members. It’s important to recognize that financial life also evolves. In fact, virtually every component of financial planning is subject to change.

Treating children fairly

Each parent may have taken a different approach to the way their children receive or earn money. Perhaps they managed allowance differently. Or maybe one parent encouraged a child to work part-time during the school year, while the other parent discouraged taking a job in favour of focusing on schoolwork. Parents in a blended family must determine how to approach such financial matters, which may involve compromise, and communicate their decision to all children.

Another possible difference involving the parents and their respective children might be the amounts saved for the children’s education. Parents in a blended family need to determine if education savings will remain separate or if they wish to equalize the accounts for all children.

Adjusting investment objectives and financial life

With a new partner and children, it’s very likely that both partners will need to reassess their previous short-term and long-term goals, and establish new ones together. For example, retirement plans can change. Depending on the new nest egg objective and each partner’s age, partners in a blended family might aim to retire either earlier or later than previously planned.

The way that updated financial goals are reached may also change. Each person may have budgeted in different ways and to different degrees. Together, the couple may need to establish a budget that enables the family to enjoy their desired lifestyle, while saving and investing to achieve their new life goals.

Providing for multiple heirs

In their previous marriage, each partner’s estate plan may have directed major assets to the spouse – which is typical. Now, however, a partner may want to provide for both the current spouse and children from the first marriage. One solution is to establish a spousal trust in the will that would help support the spouse for his or her lifetime, with remaining assets distributed to biological children. Another method is to make the children beneficiaries of a life insurance policy, with estate assets going to the spouse. Or you can give children an early inheritance, while you are living.

Home ownership can also be different for blended families. You may want to own the home as tenants-in-common, with each partner controlling his or her share of the home, which ultimately passes to the individual’s biological children.

It’s crucial to discuss estate plans with everyone involved. This way, you can address any conflicts that arise, avoiding discord among family members after you pass.

Although financial planning undergoes many changes when you’re in a blended family, the process needn’t be challenging. With guidance from an advisor, you can examine all your options and make decisions that suit you, your partner and children.

If you’re in a blended family or will be soon, speak to our Advisor.

This blog post is for informational purposes only and is not and should not be construed as, professional advice to any individual. Individuals should contact their IPC representative or financial advisor for professional advice regarding their personal circumstances and/or financial position.