Does Your Estate Planning Protect the Interests of Your Children?
For those who have children, remarriage is often a very sensitive issue. The love you have for your spouse-to-be and the love you have for your own children can conflict when you consider planning financially for your spouse and your children upon your death.
For example, if you leave your estate to your new spouse, how can you be sure that your spouse will leave your estate to your children at his or her death, and not leave it to his or her own children or others instead? How can you know your spouse will provide financial help and support to children in need as you would if you were living?
What if your new spouse were to remarry ? If you leave your assets to him or her directly, then what is to prevent those assets from ending up in the hands of the new spouse during your surviving spouse’s lifetime or upon his/her death? Either way, your children lose.
But leaving your assets to your children either outright or in trust upon your death may affect your survivng spouse if he/she will need help from you to continue to live the lifestyle you enjoyed together. How do you reconcile the interests of, and your concern for, children and your spouse that seem to be competing and unattainable?
Keeping your fingers crossed as you hope to defy such risks may not be the best choice when the well-being of sposue, your children and grandchildren is at stake. Fortunately, trusts are ideal tools to plan for such circumstances.
A well designed trust known as a QTIP Trust (qualified terminable interest property trust) can provide for your surviving spouse and children in a balanced manner and avoid the harsh results that are hinted at above. These trusts are set up to provide income to the surviving spouse for the rest of his or her life, supplemented by access to trust principal. Children can also be beneficiaries during the life of the surviving spouse. Then at his or her death, the trust assets pass to your children or heirs and the surviving spouse cannot undo that.
Making a prenuptial agreement when you remarry is another great tool to assure the welfare and protection of your children and grandchildren. A prenuptial agreement can limit the rights of your surviving spouse’s new spouse in your spouse’s estate at his or her death or upon a divorce.
Although the issues can be difficult, an estate planning lawyer with a sensitivity and understanding of domestic relations law can provide invaluable assistance.