Creating a Trust for the Benefit of Children from a Second Marriage

Jun 27, 2017
Client Newsletters Estate Planning Living Trusts News Special Needs Trusts Trust Administration Trust Management & Settlement

living trust for children of a second marriageIf you are in a second marriage, did you have children from your first marriage?

What happens when your spouse has children that you have grown fond of?

How do you treat children from a prior marriage versus the children in a current marriage?

The best solution is to create Trust(s) for the benefit of all those you want as beneficiaries. Once you have your Trust(s) established, you should seriously consider funding them with life insurance. In some cases you might even want to provide for a second spouse or other children with life insurance outside of the Trust to avoid complicated interactions between the previous family as the Trust and outside life insurance can be handled separately. This takes away many of the burdens of distributing your estate.

If you have a beneficiary with special needs, and need to provide for their care, you will want to set up a Special Needs Trust. Often times I work with clients who have children that receive government benefits, and if this child or children receive an outright inheritance, they will lose their benefits. A Special Needs Trust funded with life insurance or other liquid assets can provide the dollars needed for medical equipment, future medical treatment and incidental expenses not covered by the government benefits.

There have been occasions where clients want to leave their beneficiary some inheritance but do not want the heir to receive their share immediately. Let's be honest, not every heir is capable of handling any inheritance. Establishing a trust to distribute income to them over a period of time is a much better means of making sure they do not squander the proceeds.

Without question, clients need to plan for settling their estates regardless of the size. By making those smart decisions today, you can avoid costly expenses and conserve the assets for your loved ones.