A significant percentage of first marriages end in divorce, and most of these individuals get remarried eventually. Of course, there are also widows and widowers that tie the knot. As a result, we have a lot of blended families in the United States.
If you are getting remarried as a parent, you should definitely consider the inheritance planning implications.
Honest Communication
It can be a bit scary to propose to your significant other. It is such a big step for you, and of course, there may be the risk of rejection. In addition to people that “pop the question,” some mature couples make a mutual decision to get married without the intrigue.
Clearly, when a marriage results in a blended family, the people entering the union will discuss the challenges. There are a lot of things to think about, but estate planning may not be one of them.
You can potentially avoid the subject and revise your existing plan separately without coordinating with your spouse at all. People are different, so there is no right or wrong way to approach it. However, honest, open communication would be another option.
Premarital Agreement
Before you get remarried, you could consider a premarital agreement. This will protect both parties, and once again, the transparency will help you build a solid foundation.
It can be hard to imagine a breakup when you are committed enough to get married in the first place. Unfortunately, all the countless people that have gotten divorced felt that way. Divorces have been decreasing over the last couple of decades, but there are still over 700,000 divorces a year.
Qualified Terminable Interest Property Trust
There is a particular estate planning device that can be ideal if you are getting remarried as a parent with a solid store of resources. A qualified terminable interest property (QTIP) trust can potentially provide the best of both worlds.
To implement this strategy, you establish and fund the trust, and you name a trustee to act as the administrator. Any adult that is willing to assume the role could technically act as the trustee, but many people will opt for a professional fiduciary.
Your spouse would be the first beneficiary, and your children would be the final beneficiaries of the QTIP trust. If you die first, your spouse would receive income from earnings that are generated by assets in the trust, and they could use property that is held by the trust.
When you are drawing up the trust declaration, you could give the trustee the latitude to distribute portions of the principal on a discretionary basis if this is your choice.
Your surviving spouse would be comfortable for the rest of their life, but they would not be able to change the terms of the trust. When the first beneficiary passes away, your children would become the direct beneficiaries.
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If you are currently unprepared from an estate planning perspective, now is the time for action. You never know what the future holds, and you can go forward with peace of mind when you know that your wishes will come to fruition after you are gone.
Each situation is different, and there are various approaches that can be taken. When you work with our firm, we will gain an understanding of your objectives and your family dynamic. At the end of the process, you will go forward with a custom crafted plan that ideally suits your needs.
You can schedule a consultation at our Oklahoma City estate planning office if you call us at 405-843-6100, or you can use our contact form to send us a message.
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.