How a new marriage may change estate planning

| Oct 27, 2020 | Estate Planning |

Data from the U.S. Census Bureau indicates that 17% of divorced or widowed spouses get married again. Among people 55 and older, the rate of remarriage has grown in recent decades.

Remarried spouses should pay attention to the unique nature of estate planning when needing to balance their wishes for their new spouse with those for their children and grandchildren from prior marriages.

Potential challenges without the right planning

Without clearly documented plans, a person’s true wishes may not be realized. For example, CNBC explains that homes owned in joint tenancy with right of survivorship generally become the sole property of the surviving spouse, preventing the children of the deceased from inheriting their family home despite the indicated desire on the part of the deceased parent.

A spouse must agree to allowing another party to be the beneficiary on a 401K account as this is the default for such plans.

The qualified terminable interest property trust

According to Forbes, a qualified terminable interest property trust offers remarried couples the opportunity to take care of each other while preserving inheritances for their children and grandchildren.

A person titles assets to the trust and the trust then provides an income stream for the surviving spouse. The trust may be setup to preserve the principle for other beneficiaries, like adult children, after the surviving spouse dies. With a QTIP trust, the surviving spouse enjoys an unlimited marital deduction as well so long as that person is a citizen of the United States. Distributions to the surviving spouse may be made monthly or at least every three months.

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