Preserving your estate for your children, in general, is one of the most critical reasons to make sure you have a well-executed and organized estate plan. Unfortunately, when you are going through the estate planning process, difficult questions must be asked about your post-mortem wishes.
Protecting Assets for Your Children after You Pass
If you are married, one of the questions you have to answer, by yourself or as a couple, is how these assets will be protected for and distributed to the children you have together once you are deceased.
This is not an easy topic for anyone to discuss, and it can be especially difficult because, in reality, many people do remarry if their spouse passes away. So, this type of situation brings up a whole new set of questions:
- If my spouse remarries, can they leave everything to their second spouse and/or children from their second marriage?
- How do we ensure that our kids together will receive the benefit of our estate?
- Will trusting that my spouse will sign a prenuptial agreement if they decide to remarry be enough to protect our estate?
Being strategic and forward thinking about your estate planning can help you avoid most of these questions in the first place. Most people approach this question with some timidity, because some of the specific measures that are taken in the estate planning process can call into question the trust, values, and priorities that already exist in a relationship. It is important to make sure that when beginning a process like this you, as a couple, are in agreement with creating an estate plan together. It helps to have experienced legal counsel to guide you through many of these steps, so that emotional conflicts don’t prohibit the planning and protecting of your estate and heirs.
Setting Up A Trust For Your Child to Preserve Your Estate
The main way that people preserve their estate for their children, when the surviving spouse remarries, is by placing the estate in a trust.
If there is a question, or doubt, as to whether the trust will be administered in the way that either of you wishes, you can always name someone else as the trustee to act as a neutral party. In this case, you would provide clear and specific instructions to the trustee for making decisions about distributing parts of the estate trust to beneficiaries. For instance, if the surviving spouse has their own assets, then you would tell the trustee to take those separate assets into account when making decisions about distributions.
Provisions Against a Spouse Remarrying
It’s against public policy (well, that’s what they call it in the courts) to have a provision that prevents a surviving spouse from remarrying. But, by placing the assets in a trust, under the direction of a neutral trustee, you can at least have somebody else in charge of distributing the assets within the trust.
So, when the surviving spouse dies, the trust could say upon her death, the assets go to the kids from your marriage and she wouldn’t be able to change that. For instance, if she created a new will after you died that gave everything to a new spouse, that new will would not change the beneficiaries that have been named in the existing trust, which protects the assets for your children.
The Importance of a Legally Binding Estate Plan and Will
Even if you are 100% certain that you will not face these types of scenarios, because you are dutifully bound to your partner, it is always safer to have that sort of agreement legally binding.
Consider the following scenario:
A husband and wife are married for 25 years. They have two wonderful children. They make an estate plan, but it is a simple will that says the entire estate will go to the surviving spouse.
The husband gets ill, and passes away suddenly. The wife inherits his entire estate outright (not in trust). She grieves for nearly a decade over her deceased partner. Their children have now become adults and start to encourage their mother to try and find romance again. She meets a widower, and they help each other heal while also enjoying the benefits of romance again.
They decide to get married. He also has children. Now, here is where things can become troublesome. If the new couple decides to make new wills where the surviving spouse inherits the entire estate (notwithstanding children from the prior marriage), the family could end up with some serious estate litigation issues in the future. These problems could have been avoided when the husband was still alive, if he and his wife had considered taking a strategic approach to estate planning, including:
- A revocable living trust, specifying that upon the death of the first spouse, the deceased spouse’s one-half of the estate would be distributed to the surviving spouse in an irrevocable trust.
- A “contract to make a will”, where the spouses promise in writing that the surviving spouse will leave his or her entire estate to their children.
- Consulted an experienced estate planning attorney so they could be advised how to handle their specific situation in the best way possible.
Taking into account the various types of scenarios your partner could face if you were deceased does not have to create any sort of “emotional wedge” between you. Quite the contrary, you are actually practicing a great deal more compassion and care towards each other by making sure that a firm estate plan, that you both agree on, is in place no matter what happens.
If you are concerned about how to protect your children’s inheritance by setting up a trust for your child, or you are just considering your options for estate planning, contact us today. We are always more than happy to help you navigate through the estate planning process.
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