If you are getting remarried as a person with children from a previous marriage, you may have estate planning questions. How can you make sure that your children receive the inheritances that you would like to leave to them?
This is a good question because you never know what can unfold as the years pass. The good news is that there is a solution in the form of a qualified terminable interest property (QTIP) trust.
Covering All Your Bases
You can satisfy all of your responsibilities with this type of trust, and here’s how it works. First, you establish and fund the QTIP trust, which will be irrevocable. You cannot act as the trustee, and you can’t dissolve the trust after it has been created.
The terms of the trust will stipulate that your spouse will be the lifetime beneficiary of the trust. They will receive income that is generated by the assets in the trust, and you can also allow the trustee to distribute portions of the principal if necessary.
While your spouse is receiving these benefits, they will not have control over the principal or the ability to change the terms of the trust. This ensures that the assets will remain intact for the ultimate beneficiaries, which are your children from your previous marriage.
After your spouse passes away, the trustee will follow your instructions and distribute the assets in the trust to your children. This approach ensures that your spouse is provided for while protecting the inheritances you intend to leave to your children.
Flexibility With Estate Tax Advantages
A QTIP trust offers significant flexibility in the context of estate taxes. If the assets in your estate exceed the federal estate tax exclusion, your trustee can make a marital deduction election to defer taxation until your spouse passes away. This allows the assets to pass tax-free to your spouse during their lifetime.
Additionally, if you are in a state like Connecticut, which has a state-level estate tax, a QTIP trust can provide similar tax deferral benefits. This makes it a practical solution for families with complex financial situations or significant assets.
Why Professional Guidance Is Essential
Creating a QTIP trust requires careful planning to ensure that it aligns with your overall estate planning objectives. It’s not just about the legal documentation; it’s also about understanding the needs of your spouse and children, tax implications, and selecting the right trustee to manage the trust responsibly.
An experienced estate planning attorney can help you navigate these complexities. They will ensure that your QTIP trust is properly designed and executed so that it fulfills your wishes and protects your family’s financial future.
Need Help Now?
Learning is always a good thing, but eventually, it is time to take the final step. If you have reached that point, we would be glad to help you put a plan in place.
As you can see from this post, there are specialized tools that accomplish certain objectives. When you work with us, we will learn about your situation and make recommendations based on the circumstances.
In the end of the process, you will go forward with a tailor-made plan that is ideal for you and your family. As time goes on, we will always be available to revise the plan if and when things change.
You can learn more about assuaging remarriage concerns by reaching out to our Glastonbury or Westport, CT estate planning offices by calling 860-548-1000. There is also a contact form on this site you can use to send us a message.
