Did you know that in most states, stepchildren are not entitled to an estate under the state laws of intestacy, which determine who is entitled to receive property if you die without a will? If you have children from a previous marriage and are remarried and leave all your property to your current spouse, what happens when your spouse passes away?
If your spouse has no will, your children can be overlooked completely, and unfortunately, in today’s society, that may be all too common, particularly if the spouse remarries. To avoid this situation, you may wish to consider a Qualified Terminable Interest Property Trust, commonly called a QTIP Trust, which not only can offer estate tax advantages, but can offer advantages with blended family issues as well.
Most marital trusts take advantage of both spouses’ estate tax exemptions. A marital trust allows you to put property in trust with your spouse as the beneficiary. When you pass away, your spouse has the right to use the property in the trust. Even if the property in the trust exceeds the current federal estate tax exemption amount, your spouse won’t owe any federal estate taxes. With a QTIP Trust, when your spouse dies, the trust then transfers to the beneficiaries that you determined.
This is a popular marital trust for spouses that are both on their second marriages, with children from a first marriage, as a QTIP Trust is an irrevocable trust, meaning the terms cannot be changed after you pass away. This ensures that your beneficiaries are taken care of, as well as your current spouse.
Estate planning for blended families offers a unique set of challenges, so it is important to work with an expert estate planning attorney to make sure your family’s goals and needs are met.
- How Estate Planning for a Family May Trap the Unwary Practitioner - August 31, 2022
- State Income Taxation of Social Security Benefits - August 24, 2022
- Understanding Tax Apportionment Clauses - August 17, 2022
