The estate planning process can get complicated under some circumstances. For example, if you are a parent who is getting remarried, you have to consider the well-being of your children as you enter the marriage.
If you do not take steps to make sure that your children receive inheritances, you never know what could happen if you predecease your spouse. Your spouse and your children may not get along well, and your spouse could potentially remarry after your passing, and your children could pay a price.
Protecting the well-being of your children is part of the equation, but you should also think long and hard about your own future. Nobody wants to think this way when they are getting married, but most second marriages fail, and a higher percentage of third marriages do not withstand the test of time.
Given the fact that statistically speaking, it is likely that your marriage will not last, you may want to consider the creation of a premarital agreement.
When it comes to your children, you could choose to create a qualified terminable interest property trust. Since this is such a wordy name, these trusts are often referred to as QTIP trusts.
With this type of trust, your spouse would be the first beneficiary, and your children would be the successor beneficiaries. In the trust agreement, you name a trustee to administer the trust. This trustee could be an individual, but many people will use a trust company or the trust section of a bank.
You convey assets into the trust, and you leave behind instructions in the trust agreement. If you pass away before your spouse does, your surviving spouse would receive distributions comprised of the earnings of the trust, but the principal would remain intact.
This would be the general scenario, but you could give the trustee the discretion to distribute portions of the principal if hardship circumstances were to come about.
Your spouse would have income for the rest of his or her life, but he or she would have no ability to change the beneficiary designations. As a result, you could be certain that your children would assume ownership of the assets that remain in the trust after the passing of your surviving spouse.
A qualified terminable interest property trust can provide a solution for many people who have dual estate planning objectives.
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There is an estate planning strategy that can be implemented to respond to virtually any type of family situation. Informed planning is the key to a properly constructed estate plan.
If you would like to discuss your estate planning goals with a licensed professional, contact us through this link to set up a free consultation: Smithtown NY Estate Planning Attorneys.