There are different approaches that can be taken when you are planning your estate, and there is an ideal response to every type of situation. With this in mind, we are going to share some thoughts about estate planning for parents that are getting remarried.
Look beyond a simple will with your spouse as the sole beneficiary.
If you rework your estate plan to leave everything to your new spouse in a simple will, it can seem like a statement of trust. Your spouse-to-be will know that you would want them to take care of your children, and you may just assume that they will do the right thing if you pass away first.
It is hard to separate emotion from pragmatism during a time like this. Unfortunately, you never know what the future holds. You may want to take pause before you take this step.
Consider a qualified terminable interest property trust.
There is a widely embraced solution to this situation in the form of a qualified terminable interest property (QTIP) trust. To implement this inheritance planning strategy, you fund the trust, and you name a trustee to act as the administrator after you are gone.
It is possible to name someone that you know personally, but complete impartiality is key. You should also consider the anticipated longevity of the trustee, because this is a long-term solution. And of course, the trustee must be a very competent money manager. There are professional fiduciaries that provide trustee services for a fee.
Your spouse would be the initial beneficiary of the trust, and your children would be the successor beneficiaries. If you predecease your spouse, they will receive distributions of the trust’s earnings for the rest of their life.
You could give the trustee the latitude to distribute portions of the principal when certain circumstances exist, but you make that decision when you are drawing up the trust agreement.
Your surviving spouse will also be able to use property that is technically owned by the QTIP trust. For example, you could convey your home into the trust, and your spouse could reside in it as usual without actually owning the property.
They would be quite comfortable for the duration, but they would not have the ability to alter the terms of the trust or change the successor beneficiary designations. After the death of the surviving spouse, the children would become the active beneficiaries of the trust.
Smooth potential tensions with partial direct inheritances.
The qualified terminable interest property trust approach is a great solution all things considered, but there is one negative. When the successor beneficiaries have a financial interest in the death of the surviving spouse, the dynamic can get a bit awkward.
If you arrange for your children to receive some of their inheritances shortly after you pass away, the vibe will be more comfortable for all concerned.
Record your health care choices.
When you are planning your estate, you should account for medical scenarios that may present themselves when you are unable to communicate your own decisions.
With a living will, you express your choices with regard to the utilization of life support. The document can also include your comfort care medication and organ and tissue donation preferences.
There are other situations that can require decision-making. You can account for them through the utilization of a durable power of attorney for health care. The agent that you name in the document would act on your behalf if it becomes necessary.
The final piece to the incapacity planning puzzle is a HIPAA release form. This acronym stands for the Health Insurance Portability and Accountability Act. A provision contained within it prevents doctors from sharing medical information with anyone other than the patient.
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Most importantly, we can help you take all the right steps to provide for your blended family in your estate plan. You can send us a message to request a consultation appointment, and you can set up appointment at our Oklahoma City estate planning office to the call us at 405-843-6100.
If our Tulsa location is more convenient, the number for our office in that area is 918-615-2700.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.