There are specialized approaches that can be taken to account for different estate planning circumstances that can present themselves. As estate planning attorneys, we have seen every possible scenario unfold, so we are aware of the mistakes that people make.
We also know the best way to address any and all situations, and with this in mind, we are going to pass along four tips about estate planning for parents that are getting remarried.
Do not automatically use a simple will to leave everything to your spouse.
You may decide to go all in emotionally and financially when you are getting remarried. If you leave everything to your spouse and place your trust in them, you are making a powerful opening statement, right?
There is definitely some truth in that perspective, but it is a risky approach to say the least. Most second and third marriages do not withstand the test of time, and this is one consideration.
Secondly, even if you and your spouse stay together, you would have no guarantees with regard to the inheritances that your spouse may or may not pass along to your children.
Fortunately, there is an alternative approach that can used to cover all your bases effectively.
If you establish a qualified terminable interest property (QTIP) trust, your spouse would be the first beneficiary, and your children would be the successor beneficiaries. Assuming you pass away first, the trustee would distribute the trust’s earnings to your spouse for the rest of their life.
You would have the ability to instruct the trustee to distribute portions of the principal on a discretionary basis if this is your choice. Your surviving spouse would also be able to utilize property that is technically owned by the trust.
This arrangement would fulfill your responsibility to your spouse, but they would not be able to change the beneficiary or directly access the principal.
After they are gone, your children would become the beneficiaries. They would receive distributions in accordance with the terms that you set in the trust agreement.
Consider leaving direct bequests to your biological children.
The scenario that we described above is beneficial on a practical level. However, there is a morbid undertone if the children have to wait for your surviving spouse to pass away before they receive anything.
As a response, you could make sure that your children receive partial inheritances shortly after you pass away to prevent an uncomfortable dynamic.
Choose a highly competent and impartial trustee.
If you utilize a qualified terminable interest property trust as your estate plan centerpiece, the trustee is going to be thrust into a potentially sensitive position.
You could engage someone that you know personally, but you have to consider the impact of existing relationships with the interested parties. There is also the fact that the trustee will be managing income producing assets, so financial acumen is key.
Trust companies and the trust departments of banks offer trustee services for a fee. A professional fiduciary would have no personal connections to the interested parties, and they would be fully qualified from an asset management perspective.
Record your health care preferences in advance.
Your surviving spouse and your children could disagree about medical decisions that could present themselves toward the end of your life. To assert your own wishes in no uncertain terms, you should include documents called advance directives for health care.
You can state your life-support preferences in a living will. A durable power of attorney for health care can be added to name an agent to make medical decisions on your behalf if it becomes necessary. These would be decisions that are not related to life-support.
The incapacity planning component should be topped off with a HIPAA release form that will give doctors the ability to share your medical information with the health care agent.
We Are Here to Help!
As you can see, there are a lot of things to think about when you are planning your estate, regardless of your family situation. We can gain an understanding of your objectives and your concerns and help you devise a custom crafted plan that ideally suits your needs.
You can set the wheels in motion right now if you call us at 860-548-1000, and you can fill out our contact form if you would prefer to send us a message.