The fact that a significant percentage of marriages end in divorce is well-known at this point, and studies show that the majority of second and third marriages end in divorce.
From an estate planning perspective, there can be some challenges for divorced people who are getting remarried.
First of all, if you are getting remarried after you have been divorced, you may want to consider the creation of a premarital agreement. Even though you are getting married because you are in love, the statistics tell a compelling tale. If your second or third marriage withstands the test of time, you are defying the odds.
There is also the matter of the inheritances that you want to leave behind to your children. If you were to get remarried and leave everything to your new spouse in your estate plan, there are no guarantees with regard to the actions of your spouse if you pass away first. He or she could get remarried, and your property could slip away from your children.
QTIP Trusts
There is an estate planning tool that can be used if you want to protect your children when you are getting remarried. You could convey assets into a qualified terminable interest property (QTIP) trust.
After you fund the trust, you name a trustee to administer the trust after you pass away. You may want to utilize a corporate trustee such as a trust company or the trust section of a bank. Your spouse would be the first beneficiary, and your children would be the final beneficiaries.
If you do in fact predecease your spouse, he or she would receive distributions from the earnings of the assets that you conveyed into the qualified terminable interest property trust throughout the rest of his or her life. Your surviving spouse would also be able to utilize real property that you conveyed into the trust.
The trust would provide for your spouse, but he or she would not be able to change the final beneficiary designations. After the death of your spouse, your children would assume ownership of the assets in the trust.
A qualified terminable interest property trust can provide you with the best of all worlds if you want to make sure that everyone that you love is provided for after you pass away.
Schedule a Consultation
Every family is different, and there are many different scenarios that can enter the picture. Fortunately, there is an inheritance planning strategy that can be used to address virtually any type of situation.
Personalized planning is the key to a well constructed estate plan. If you would like to discuss your legacy goals with a licensed professional, send us a message through the following link to set up a consultation: Sacramento CA Inheritance Planning Attorneys.
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