Families are smaller these days, and two-parent households are less common. Same-sex couples can legally wed in all 50 states. And a “dependent” is no longer always a biological child younger than 21; it may be an older parent, a same-sex partner, a spouse, or stepchild from remarriage, a former spouse, or even in a sense oneself.
We will take a look at five of the more common types of modern family arrangements:
- Blended families
- Single-parent households
- Singles
- Same-sex couples
- Multigenerational households
Blended families
It’s common these days for adults who decide to marry or live together to bring children from a previous relationship into the picture. That can mean more dependents to take care of. A family might include children from each spouse’s previous marriage, plus new children from the new union.
More kids mean more expenses, the biggest of which is college. Who should pay? The biological parent the child lives with most? The biological parent with the most resources? The stepparent? And who do colleges expect to shoulder the costs? Figuring out how to maximize financial aid for college can be tricky in blended families since there are both FAFSA guidelines and, for many private schools, CSS/PROFILE guidelines to learn the ins and outs of.
The good news is that blended families can pool their assets. They might be able to afford things that single and divorced parents can’t. Blended families can find it difficult to save, though, because of financial liabilities created by a previous marriage, such as child support and alimony, not to mention the loss of shared assets that were divided in the divorce settlement.
Also complicating finances are tax matters related to selling previously shared assets and claiming dependents.
Blended family estate planning is more difficult, too.
Carrying life insurance to provide for your new dependents and updating beneficiaries on old policies are key. You don’t want proceeds accidentally going to your former spouse.
Further, there may be a need for increased life insurance in blended families where the parents are not married because of the loss of survivor’s benefits or the ability to draw on the higher earner’s Social Security benefits.
In next blogpost, we will discuss single-parent households.