Many marriages end in divorce, and a significant percentage of these divorced people have children. If you were to remarry as a parent, you may have some estate planning concerns. You naturally want to protect your new spouse, but what about your children? If you leave everything to your spouse, your children could ultimately be disinherited.
To respond to this type of situation, you could utilize an estate planning device called a qualified terminable interest property trust. Because the name of the trust is somewhat wordy, these trusts are often referred to as QTIP trusts.
The way that it works is you fund the trust, and you name a trustee to administer the trust after you pass away. Many people will utilize a corporate trustees such as a trust company or the trust section of a bank. Professional fiduciaries understand how to administer a qualified terminable interest property trust, there would be no longevity concerns, and there would be no conflicts of interest.
Your spouse would be the first beneficiary of the qualified terminable interest property trust, and your children would be the final beneficiaries. If you were to die before your spouse, the trustee could distribute the earnings from the trust to your spouse for the rest of his or her life. The surviving spouse could also continue to utilize property that has been conveyed into the trust, so if you were to transfer your home into the trust, your spouse could continue to live in the residence as usual.
You would be satisfying your responsibility to your spouse, because he or she would be set for life. However, your surviving spouse would have no power to change the terms of the trust. The beneficiary designations could not be altered.
After the death of your spouse, your children would assume ownership of property that remains in the qualified terminable interest property trust. If you utilize this estate planning tool, you can cover all of your bases if you are getting remarried as a parent.
Attend an Upcoming Seminar
We do everything possible to provide educational opportunities to people in the greater Hartford area. This blog and the other information on our website can be accessed at any time, but we also offer seminars on an ongoing basis.
During the early portion of December, we have a number of inheritance planning seminars on our schedule. These information sessions will provide a great deal of very useful information, and there is no charge to attend our seminars.
Though the seminars are free, space fills up quickly, so we do ask that you register in advance so that we can reserve your seat. To obtain more details and registration information, click the following link: December Inheritance Planning Seminars.