Long Island Elder Law & Estate Planning

When you are looking for information about estate planning, you may run into a rather confusing series of acronyms. We try to demystify things here on our blog and explain what the alphabet soup is all about. In this post we will look at the legal device called a QTIP trust.

Estate Planning & Remarriage

Any time you are going through a significant life event, such as a change in marital status, you should discuss the estate planning implications with your attorney. Your existing estate plan is going to be obsolete if you get divorced, and revisions will be necessary when and if you get remarried.

If you decide to remarry after having children from a previous marriage, you probably have some concerns. Clearly, when you get married you intend to spend your life with the person that you have fallen in love with, and this is as it should be.

However, from a pragmatic perspective, you may want to consider the statistics. It is statistically likely that a second marriage will fail. Third marriages fail with even more frequency. To protect yourself financially given these statistics, you may want to consider the creation of a premarital agreement.

These agreements have become more widely accepted over the years among everyday people. A prenuptial agreement is intended to protect the interests of both parties entering a marriage; it is not necessarily a one-way street.

To make sure that your children are provided for as you simultaneously protect your spouse, you could create a QTIP trust after you enter into a premarital agreement defining your personal property. The acronym QTIP stands for qualified terminable interest property, so we are talking about a qualified terminable interest property trust.

You convey assets into the trust, and you make your children the secondary beneficiaries.  Your spouse will act as the beneficiary at first if you do in fact predecease your partner.

While your surviving spouse is still living, he or she can utilize the trust’s earnings. Generally speaking, the principal would be untouchable unless you allow for the trustee to make discretionary distributions under certain emergency circumstances.

Your surviving spouse receives income from the trust for life, so you are taking care of your responsibility to your spouse. However, the surviving spouse cannot change the terms of the trust in any way. Because of this, your children are completely protected.

It should be noted that there are estate tax advantages that can be gained from the creation of a QTIP trust, because the tax would not be levied while your spouse is still alive.

After your surviving spouse passes away, the assets that remain in the trust are distributed to the children who have been named as the ultimate beneficiaries.

 

 

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About Eghrari Wealth Training Law Firm

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.