(Source: Forbes) By Mark Eghrari
Creating an estate plan estate plan requires our clients to consider a number of uncomfortable possibilities — and unfortunately, one of those possibilities is the fact that your spouse may someday remarry.
That thought may not make you feel great, but what should concern you are are the possible financial consequences, especially where your children are concerned. If the bulk of your estate passes to your spouse and he or she remarries, those assets may no longer pass, either in whole or in part, to your children, whether from this marriage or from a previous marriage. If your spouse dies first, the assets you left behind could fall not only under her control but also under the control of her new spouse.
One solution is the Family Wealth Trust, an estate planning tool designed to provide significant remarriage protection.
Family Wealth Trusts stipulate that when you pass away your assets are placed into a separate and irrevocable sub-Trust. Your children are designated as the beneficiaries of the Trust. Your spouse is named as the trustee of this Trust. She can use or benefit from the property held in Trust, but she does not own those assets or the sub-Trust itself. Ownership in the property in the Trust is reserved for your children. That way
Family Wealth Trusts qualify for the marital deduction in your gross estate. Any assets above the applicable exclusion can go into that Trust, allowing you to better avoid estate taxes if you own considerable assets. (Estate tax considerations could become even more important if the estate tax exclusion decreases.)
By making those decisions today, you can not only provide for your children but can also help ensure your spouse will be afforded some level of financial protection in his or her new marriage.