You may think that you are in a challenging situation if you have significant resources and you are getting remarried as a parent with children from a previous marriage. Under these circumstances, you want to provide for your new spouse in your estate plan.
However, if you leave them all or most of your resources, there would be no guarantees with regard to the inheritances that you want to leave to your children. Your surviving spouse could get remarried, or they may decide that they do not want to leave anything to your children.
Fortunately, there is a solution if you are in this situation, and we will look at it in this post.
Qualified Terminable Interest Property (QTIP) Trust
There is an estate planning tool to address just about any scenario, and the right tool for this job is the qualified terminable interest property trust. When you establish and fund this type of trust, you name a trustee to act as the administrator.
You can name another family member or personal friend, but this is a sensitive position because there are competing interests. And if you have income-producing assets, you want someone that is an experienced financial manager to maximize the resources.
Trust companies and the trust departments of banks provide trustee services for a fee. A professional fiduciary can be the right choice for many people because there would be competent administration, no conflicts of interest, and organizational oversight.
Your spouse would be the first beneficiary of the QTIP trust, and your children would be the final beneficiaries.
If you die first, the trustee would distribute the earnings that are generated by the resources to your spouse for the rest of their life. You could also give the trustee the latitude to distribute portions of the principal under certain circumstances if you choose to do so. The surviving spouse can also use property that is technically owned by the trust.
You would be fulfilling your responsibility to your spouse if you plan your estate in this manner, but they would have no ability to change the terms of the trust in any way. After their passing, your children would inherit the assets that remain in the trust.
Circumvent an Awkward Dynamic
This approach is very effective, but there is an element that involves human nature. Your children may know that they are going to receive their inheritances eventually, but there is no getting around the fact that they have to wait until your spouse dies.
The implications are obvious, but you can address the matter in advance. When you plan your estate, you can set aside a certain amount that will be transferred to your children immediately after you die. This should prevent turbulence that could exist among the surviving members of your family.
Attend an Estate Planning Seminar!
You came to our site because you are looking for information about estate planning, and you’re in the right place. We have many written resources on this site, and you are free to access any or all of them free of charge.
Plus, we conduct seminars that cover estate planning myths, living trusts, wills, and many other topics. You can check out our seminar page to obtain more information about these sessions.
Are You Ready to Act?
If you have already decided that you would like to work with a Burbank, CA estate planning lawyer to develop your plan, there is no time like the present. You can call us at 818-937-2335 to schedule a one-on-one consultation, and you can use our contact form to send us a message.