Our attorneys always emphasize the fact that estate planning is an ongoing process. If you were to put an estate plan in place today, it would be based on the circumstances of your life at this moment. As we all know, the only constant is change, so the picture will probably look quite a bit different years from now.
The divorce rate for first marriages has gone steadily down over the last 30 or 40 years, but it is still rather high. Clearly, many people that get divorced ultimately remarry, and a lot of them are parents. In this post, we will look at the estate planning steps that you can take to protect your interests when you are getting remarried as a parent.
If you are getting remarried as a financially successful person, you should definitely consider the execution of a prenuptial agreement. If you work with an attorney to draw up this type of contract, you can make sure that your interests are protected come what may.
It should be noted that the divorce rate rises for second and third marriages, so a premarital agreement is simply a prudent safeguard. We should also emphasize the fact that the protection swings both ways, so it can help both parties feel comfortable entering the marriage.
Qualified Terminable Interest Property (QTIP) Trusts
A qualified terminable interest property trust is a very useful estate planning tool that can be the ideal solution for a person of means that is getting remarried. It would be particularly attractive to someone that is marrying an individual that is quite a bit younger.
If you establish this type of trust, you would be called the grantor, and your new spouse would be the first beneficiary. The ultimate point of the trust is to make sure that your children are not forgotten, so they would be the secondary beneficiaries.
As the grantor, you would fund the trust, and you would name a trustee to administer the vehicle after your passing. It can be someone that you know, but many people use a professional fiduciary like a trust company or the trust department of a bank.
Assuming you do in fact predecease your spouse, they would be able to use property that had been conveyed into the trust; this arrangement is often referred to as a life estate. The surviving spouse would also receive ongoing distributions from the trust’s earnings.
If you choose to do so, you could give the trustee the discretion to distribute portions of the principal, but this is totally up to you. As you can see, your spouse would be well cared for after you are gone, but he or she would have no ability to alter the terms of the trust in any way.
When the first beneficiary passes away, your children would inherit the assets that remain in the qualified terminable interest property trust.
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We have some fantastic resources on this website aside from our blog, and one of them is our estate planning worksheet. It is being offered free of charge right now, and you can gain a better understanding of where you stand if you take the time to go through it. To get your copy, visit our worksheet download page and follow the simple instructions.
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You can take your estate planning knowledge to another level if you attend one of our upcoming seminars. They are being offered on a complimentary basis, so you have everything to gain and nothing to lose if you sit in on one of these sessions. To see the schedule and obtain registration information, visit our seminar page and click on the date that works for you.
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