Estate Planning With Multiple Marriages
A common problem for someone crafting their estate plan arises when one feels torn between the needs of their current spouse, and children from a previous marriage. This situation has been the basis of many movies & TV shows, but it is a very real situation.
Are There Specific Types Of Trusts For Second or Subsequent Marriages?
There are definitely actions you can take to help alleviate the concerns of your children and your current spouse. Your children may be concerned that your wife or husband will exhaust your resources, leaving them with nothing. This is often the case when there is animosity between your children and their step-parent.
By naming your current spouse as the life beneficiary for assets in trust and naming your children as the final beneficiaries of the assets in the trust, you effectively limit the ability of your spouse to use assets in the trust during their lifetime. So, let’s say you have a home that you wish to entrust to your children. Your spouse can continue to live in the home after you have passed away, yet they will not be able to place the home in a trust to anyone else. You can even prevent your spouse from selling the home.
The property in your trust will pass on to your children once your spouse is deceased. If your spouse passes away before you, then the property will pass on to your children directly.
Restrictions on Your Spouse’s Rights
Generally speaking, you have broad discretion to limit your spouse’s rights in these situations. Depending on what your wishes are, you may want to allow your spouse to be the trustee of your trust, or name one of your children. These decisions are typically best made with your Michigan estate planning attorney.
You can also limit the amount of income your spouse can earn from property in the trust. For example, if you and your spouse own a home, then you can allow them to earn income from renting the home out if you wish. Or you can direct that income to be included in the trust.
Very often, both spouses in a second marriage will create trusts like this, keeping most of their assets in separate trusts with their children named as the beneficiaries. However, there are circumstances where one spouse has children and the other does not.
Choosing The Trustee
In all trusts, the trustee has a substantial amount of responsibility and therefore, power. They will be managing the property and assets in the trust, and ensure that all restrictions placed on your current spouse are being followed. They will also be responsible for making sure any payments made from the trust to your husband or wife are appropriate.
Keeping that in mind, you may want to name a child that has a good relationship with your current spouse. Naming a child that has animosity toward your husband or wife could cause strife in the family. Your spouse and children could have very different needs and goals, which could make conflict unavoidable. Your best option will be to work closely with an estate planning expert in Michigan that can help you draw up your documents clearly, to avoid confusion.
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