Provide for Your Children in Your Estate Plan When You Get Remarried
For several decades now the divorce rate has hovered around 50 percent in the United States for a first marriage. Many of those divorces include minor children and many of those divorcees go on to remarry, making blended families common in the U.S. It can be difficult to successfully blend two existing families into one new family daily; however, you also need to consider the bigger picture when you create a blended family. To do that you likely need to update your estate plan. Toward that end, the Coral Gables estate planning attorneys at Stivers Law discuss how to provide for your children in your estate plan when you get remarried.
Updating a Estate Plan Is More Important When You Create a Blended Family
In a traditional estate plan for a first marriage, the couple creates reciprocal estate plans that include terms leaving their entire estate to the surviving spouse. This effectively leaves all assets to a surviving spouse who then leaves the combined assets to the couple’s children upon his/her death. Other aspects of estate planning are also less complicated. For example, decisions relating to beneficiary designations and fiduciary roles are also reciprocal and uncomplicated. Once you create a blended family, however, things become more complicated and the need for a comprehensive estate plan is heightened.
What Changes in your Estate Plan When You Create a Blended Family?
When you get divorced, you need to update your current estate plan – even if you do not have children. If you do have children from your first marriage, the need to update your estate plan is even more important. Some estate planning components that may need to be updated include:
- The terms of your Will to reflect the fact that you are no longer married.
- Beneficiary designations on life insurance policies, retirement accounts, financial accounts, and any other assets that include beneficiaries.
- Fiduciary positions, such as the Executor of your Last Will and Testament and the Trustee of a trust.
- Agent designation in an advance directive and/or power of attorney.
When you remarry and create a blended family, you will need to update your estate plan once again to include your new spouse and/or any step-children. Even more important is the need to ensure that your children from your previous marriage are protected and provided for in your updated estate plan. One estate planning tool that allows you to provide for your new spouse financially while still protecting assets intended for your children from a previous marriage is a Qualified Terminable Interest Property trust, or QTIP.
What Is a Qualified Terminable Interest Property Trust?
A QTIP trust operates in basically the same way as any other trust with some special terms designed to provide for your spouse while protecting your children’s inheritance. You will need to appoint a Trustee to oversee the administration of the trust and to manage the trust assets. Assets transferred into the QTIP trust are not actually gifted to your current spouse when you die. Instead, your spouse receives income from the trust assets but cannot withdraw the principal from the trust nor can he or she decide on the ultimate disposition of the trust assets. In the case of real property, your surviving spouse may also receive a “life estate” in the property, meaning that he or she may remain in the home until death, but will never own the property outright. When your surviving spouse dies all assets held in the trust are then transferred to the intended QTIP trust beneficiaries, typically your children from a previous marriage.
Contact Coral Gables Estate Planning Attorneys
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about how to make sure your children are protected in your estate plan when you get remarried, contact the experienced Coral Gables probate attorneys at Stivers Law by calling (305) 456-3255 to schedule an appointment.