I am sure at times the thought of disinheriting your kids may have been an attractive thought. The fact of the matter is that many people run the risk of disinheriting their kids by accident because of poor planning.
If you have a Simple Will, also known as an “I love you!” will, everything you own goes to your surviving spouse and vice versa. If your surviving spouse remarries and executes another “I love you!” will with the new partner the same thing happens if your spouse dies. Everything goes to the surviving spouse.
Suppose that the new partner has kids. They now have your family assets and likely have guardianship over your kids and full discretion over how to deploy the resources. We can assume that they will not neglect their own children. Can we assume that your resources will be used to take care of your children?
There is a simple fix called a QTIP Trust. The Qualified Terminable Interest Trust is established for the interest of your spouse and children. The QTIP Trust allows your spouse access to the income and principal of your estate as long as she is not remarried. At that point the trust provides for income and some distributions but the assets in the trust cannot leave your estate. This safeguard provides protection of the assets for your children.
If you would like more information on this technique, contact us and we will gladly pass it along. Or better yet, discuss this with your attorney as you review your legacy planning documents.
By David M. Wheat, CFS, ChFC