Unfortunately, a significant percentage of marriages do not withstand the test of time. First marriages fail at a significant rate, and perhaps surprisingly, the majority of second and third marriages end in divorce.
These statistics are eye-opening if you adopt a completely pragmatic stance. Depending on the circumstances, you may want to consider entering into a premarital agreement if you are a divorced person who is getting remarried. Though you will certainly be hoping for the best, you and your new spouse will be defying the odds if your marriage is successful over the long haul.
Protecting Your Children
If you are getting remarried as a parent, you are naturally going to be concerned about the well-being of your children after you pass away. There are no guarantees if you simply allow your spouse to inherit everything that comprises your estate.
Your spouse could remarry, and this could certainly change the dynamic. Plus, your spouse may not necessarily have a close relationship with your children, and this can be an added source of concern.
When you are engaged in your inheritance planning efforts as a parent who is getting remarried, you may want to consider the creation of a qualified terminable interest property trust. Since the name of the trust is such a mouthful, these trusts are often referred to as QTIP trusts.
You name a trustee to administer the trust when you create the trust declaration. This can be an individual that you know personally, but you could alternately opt for a corporate trustee.
Your spouse would be the first beneficiary of the qualified terminable interest property trust, and your children would be successor beneficiaries. If you die before your spouse, your surviving spouse would receive distributions from the earnings of the trust. These distributions would continue for the rest of your spouse’s life.
The terms of the trust would be set in stone. After you are gone, your spouse would not have the ability to change the secondary beneficiaries or directly access the principal. Your children would assume ownership of the assets that remain in the trust after the death of your surviving spouse.
Explore Your Inheritance Planning Options
Now that you have gained an understanding of the value of QTIP trusts, you may wonder about the other inheritance planning devices that can be utilized. If you would like to explore all of your options, you may want to browse our electronic library of special reports.
You can access any or all of the reports free of charge, and you will certainly come away with a lot of useful information if you take the time to download the reports that are of interest to you. To see the complete list of titles, click the following link: Free Estate Planning Reports.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.