Not so long ago, the "typical" estate planning situation was of a married couple of moderate income with children. But increasingly there is not typical American living arrangement. Plenty of us require special arrangements in our will, trust, or other parts of our estate plan.

Children from Other Marriages. If you’re one member of a couple in which both you and your spouse have children from a previous marriage, you might want to arrange things so your own money goes to your own children, and your spouse’s money goes to his or her children. If those children are earning their own incomes, then you might consider leaving more to your surviving spouse, or to other family members, such as by setting up a trust for your grandchildren. Here is a brief discussion of some of the transfer techniques.

QTIP Trusts – for heirs, not ears. Providing for children from different marriage may conflict with tax planning. The marital deduction allows spouses to leave their entire estates to each other without paying taxes. What if you and your spouse have children (especially grown children) from other marriages? You might naturally prefer that your biological children receive more of your estate than your spouse’s children from a previous marriage. If you leave your entire estate to your spouse, he or she might not agree – but has the final decision after you’re gone.

That’s why some "patchwork" families are using QTIPs. The Qualified Terminable Interest Property Trust allows you to leave your property in trust for your spouse, but then it goes to whomever you wish after your spouse dies. You still get the marital deduction, your spouse gets to live off the income from the trust, and your children get the property upon his death. The problem: no one else can benefit from the assets in the trust until your spouse dies, which might not leave other family members enough money for their comfort until then. Insurance can ease the blow. If you have a large enough estate, you can leave up to $675,000 (tax free under current law) to your children or into a trust for their benefit on your death, and put the rest into the QTIP trust

Mutual Wills. Mutual wills provide another option where children from different marriages (or anyone else that you want to inherit some of your property) are involved. Each spouse leaves all property to the survivor, who after death will leave specified property to the friends or relatives the other designates. Warning: use of mutual wills might jeopardize the marital tax deduction and also involves issues of contract law that vary among states. Get professional advice before using this strategy.

Don’t confuse mutual wills (two separate wills that refer to each other and are trying to accomplish the same purpose) with a joint will (one will that attempts usually unsuccessfully to cover two people).

Life Estates. What if you want your surviving spouse to be able to live in the family home, but want to make sure that the house will ultimately pass to your children? A life estate is an option. A life estate means that the recipient only gets to use the property for as long as he or she lives, then it is passed on to a third party (or occasionally reverts to your estate). It can’t be sold or substantially modified by the life tenant. Your will can include this provision but check with a lawyer before trying such property conveyances; they can be quite complex. A better method is to leave it in trust for your spouse so long as he or she is able and desires to occupy it.

Life Insurance. Life insurance is another tool you can use to distribute assets amond children from different marriages. You can set up an irrevocable trust for your children that will be ultimately funded from the proceeds of a life insurance policy. The trust pays the premiums and actually owns the policy. When you die, your children receive the benefits from the trust tax free, while your spouse gets the rest of your estate.

Trusts. The versatility of trusts makes them useful instruments for allocating assets among different families because you can set up a separate trust for the children of different marriages, or even for each family member.

Prenuptial or postnuptial agreements. If you’re an older person with grown children from another marriage, you should strongly consider asking your lawyer, as part of your estate plan, to prepare a prenuptial or postnuptial agreement that specifies that the separate property of each party remains separate at death. Then your wills or will substitutes can leave your assets directly to your respective children on your death. They’re already adults, and it’s unlikely your spouse will survive you long enough to require large amounts of money from your estate to live on.

Contracts to make a will. Such a contract prevents your spouse from changing arrangements in his or her will without your knowledge and consent. These can supersede any updated will, and can be written so that they expire if the marriage officially ends in divorce or annulment. In effect, such a contract guarantees that each person will stick to the jointly agreed estate plan, instead of changing a will without the other’s knowledge. Their obvious drawback is that since they cannot be changed without the other person’s permission no matter how much your circumstances change, they surrender the flexibility that a will provides. These contracts are usually prepared in anticipation that some conflict will occur; therefore, it may be a good idea that each party be represented by a lawyer.

One thing to keep in mind: patchwork families are a prime category for will contests as children from different marriages may be more likely to disagree about the distribution of estate assets. People in this category should be especially careful that their wills, prenuptial/postnuptial agreements or contracts to make a will are properly prepared.

Joint Tenancy. If your combined estate falls under the $675,000 limit, and you don’t expect it to exceed that amount by the time the second spouse dies, it’s sometimes simpler just to leave all the property in joint tenancy, because then the surviving spouse receives all the assets without worrying about estate tax and there’s no probate. However, you still need to take into account the drawbacks of joint tenancy: the fear that the surviving spouse will squander the money instead of spending it on the children or will remarry and leave all the money to the new family. Since joint tenancy doesn’t let you control the distribution of your money after you die, you will have to use a trust or will if you want the money to go to anyone but your spouse.