A trust is conventionally used for decreasing estate taxes and can provide other benefits as part of a well-devised estate plan.
In a second (or third or ensuing) marriage, a spouse might feel divided between the needs of their present spouse and the needs of their children from a previous marriage. These children might be concerned that the parent’s present spouse will deplete their inheritance, particularly if your spouse doesn’t have a good relationship with your children. Luckily, you can meet the possible contrasting needs of your spouse and your children from a previous marriage by creating a specific type of trust. This will designate your spouse as a life beneficiary of the assets placed in the trust, at the same time designating your children from your previous marriage as the conclusive beneficiaries of the trust assets.
Consequently, your spouse will have a restricted arrangement of rights for using the property in the trust throughout their lifetime. They won’t be able to entrust the property in the trust to anyone else. In the meantime, your children will get all of the property in the trust following your spouse passing away. (Should your spouse pass away before you, the property in the trust will pass straight to your children or the other conclusive beneficiaries of the trust devoid of needing to make any modifications.) This arrangement also may work for individuals that aren’t married in which they have children from a prior relationship.
Limitations on Your Spouse’s Rights
You have significant discretion in determining how much to limit your spouse’s rights. This might involve designating an individual other than your spouse to act as the trustee of the trust, like one of your children. On the other hand, you might want to enable your spouse to get income from the trust property but restrict them from having an opportunity to spend trust principal.
If you’re an owner of real estate with a spouse in your second marriage, you may wish to enable your spouse to live in the home for the rest of their life if they outlive you. You also may feel just as resolutely that you want the house to go to the children from your first marriage following your spouse’s passing. You can achieve both objectives by placing the home in a trust that enables your spouse to use it but restricts them from selling it. Some associated matters that you may need to deal with include if your spouse may rent the home and utilize the income from the rent, in addition to who is obligated in paying for maintenance and taxes on the home.
Frequently, each spouse in a second or succeeding marriage will develop this kind of trust. The trusts might or might not mirror one another other. If each spouse bequeaths their half interest in a mutual asset to children from their previous marriage, the two groups of children might be required to work out some way to split its value following both spouses passing away, because they might not know and/or trust each other. This can lead to challenges in the future.
Picking the Trustee
Like any trust, a trustee will have significant control. They will handler the trust property, ensure that your spouse is adhering with the limitations on their utilization of trust property, and establish if payments to your spouse from trust funds are suitable. For instance, you may not want to give this authority to a child that does not get along with your spouse since this could cause family strain. Concurrently, you should acknowledge that your spouse and your children might have primarily different objectives and requirements, and conflicts may prove inescapable. You should firmly think about retaining a lawyer to assist you in making the trust documents as plain and just as possible. Nevertheless, your priorities are in the end, yours to decide.
Estate planning in second marriages. (2019, March 19). Retrieved February 08, 2021, from https://www.justia.com/estate-planning/estate-planning-in-second-marriages/
Arizona Family Law
Naming guardians in your will can be part of your estate plan. You may think you’re too young or don’t have enough money to justify the expense, but if you have children, you have priceless assets. There are many considerations when naming guardians for your kids. However, the process doesn’t have to be expensive or complicated.
There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.