While it is true that everyone over the age of 18 should have at least a rudimentary estate plan, individuals who are part of a blended family face specific estate planning challenges that make planning even more important. One estate planning tool that was once used almost primarily by the wealthy but is now commonly found in the average estate plan is a trust agreement. In fact, trusts have evolved over the last several decades to the point where there is a specialized trust for almost every estate planning goal or objective. If you are re-married, and wish to provide income for your current spouse while ensuring that the assets at your spouse’s death will go to your children from your previous marriage, a Qualified Terminal Interest Property trust, or QTIP for short, would be used.
Before divorce and re-marriage became relatively common, estate planning for spouses usually dictated that one spouse would leave everything to the other spouse and vice versa. The surviving spouse would then pass everything down to the children upon his/her death. Such relatively simple estate planning does not work, however, if you are no longer married to the mother/father of your children. For roughly half of all Americans who are in a second (or subsequent) marriage an estate plan needs to provide for the current spouse while still protecting assets that are ultimately meant for children from a previous marriage. A QTIP trust allows you to do just that.
Regardless of how strong your relationship may be, or how much you trust your current spouse, leaving everything to him/her with the hope that the assets will survive, undiminished, to be passed down to your children upon his/her death is simply not the best plan. A QTIP trust offers a better solution by allowing your spouse to benefit from those assets during his/her lifetime while still protecting them for your children. Assets held in a QTIP trust will earn income that can be used by your spouse; however, your spouse will not be able to control the disposition of the assets nor will he/she be able to access the majority of the principal held in the trust. Upon the death of your spouse the principal is then paid out to your children or any other beneficiary you appoint.
For the millions of Americans living in a blended family, a QTIP trust offers a solution to a common estate planning problem. If you think a QTIP trust is right for your estate plan, be sure to contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia, by calling 800-295-1917 to schedule your appointment.