If you’ve ever been divorced, you may be wondering how to provide for both your new spouse, and your children from a prior marriage.
When it comes to estate planning, you’re right to wonder. If your will leaves everything to your new wife or husband, then when you pass away, your spouse could disinherit your children and leave all your money to his or her own children instead. Or give all your money away, or spend it, or lose it to medical costs or a scam or lawsuit. Either way, your children lose.
It’s natural to want to provide for your spouse, but it’s also natural to want to protect your children. Fortunately the law offers a way to do both, with a QTIP trust.
With a QTIP (Qualified Terminable Interest Property) trust, you set aside money when you die, under the control of a trustee and for the benefit of your spouse. The trustee must pay all trust income to your spouse (e.g., investment income), and you may also allow payment of principal (i.e., the money in the trust) to meet your spouse’s needs. However, your spouse has no right to access or take money from the trust. When your spouse dies, the remainder left in the trust is distributed to your children.
A QTIP trust offers a way to provide income to your spouse for life, while ensuring that your estate will go to your children. It also protects your estate from your spouse’s creditors, in case your spouse is a spendthrift, or runs up big medical bills, or gets sued or targeted by fraudsters. A QTIP trust is a valuable estate planning tool. To discuss including one in your will, call or email us today.