If you are the glue that holds your blended family together, you might wonder what will happen after you are gone. It may not be enjoyable to think about your own death, but it can be prudent to plan for that inevitability, especially when your family situation is not as straightforward as some family situations.
Unfortunately, when your family includes children from different marriages, you have some unique estate planning concerns to address. When you have a blended family, it can be especially important that your estate plan is carefully crafted to make sure your wishes are respected and family squabbles are avoided.
Why are blended families more difficult to plan for?
When your family includes children from different marriages, your best intentions to provide for everyone after your death can easily go awry. For example, you may leave all your assets to your current spouse, so your spouse can live out the rest of his or her life comfortably. You and your spouse may have an understanding that any remaining money is to go to your children from a previous marriage. However, if your spouse dies intestate or loses touch with your children later in life, the money remaining from your assets may end up going intentionally or unintentionally to only your spouse’s children.
How can a QTIP trust benefit a blended family?
A qualified terminable interest property (QTIP) trust is a marital trust. As such, its main purpose is to provide income for your spouse during his or her lifetime. Your spouse cannot change the beneficiaries after your pass away. Your spouse also cannot sell or give away any of the property he or she receives.
After your spouse passes away, any remaining money in the trust will be distributed according to the terms you set for the trust. This means that you, not your spouse, will choose where the remaining money goes, so you can be sure none your children will end up disinherited.
The way you plan for your estate is ultimately a personal decision. However, if you have a blended family, it may be important to take steps to ensure your assets go to loved ones in the way you intend and do not end up causing family rifts. A QTIP trust may be one way you can protect your family even after you are gone.