If you have adult children from one or more prior marriages, it can be challenging to provide for everyone you love in your estate plan. You, of course, want to provide for your current spouse, yet you want the bulk of your estate to remain with those who share your bloodline.
Below is one way to assure your wishes are carried out.
Fund a QTIP trust during your lifetime
Known formally as Qualified Terminable Interest Property (QTIP) trusts, these are irrevocable, so once assets are transferred into the trust, they can’t be removed. That’s why it’s important to plan carefully for a future when you will no longer be there to guide the ship.
How QTIP trusts work
Primarily used by those who have children from former marriages and relationships, these trusts allow the surviving spouse to use the assets and funds (with certain restrictions) during their lifetime. Then, once they, too, have died, those assets go to the beneficiaries and heirs of the trust grantor and not their spouse’s children or other relatives.
There is some flexibility with the asset transfer when funding QTIP trusts. The grantor can fund them upon creating the trust or use their last will and testament to direct the asset transfer once they pass.
Grantor chooses trustee, beneficiaries
You should select a trustee who will abide by their fiduciary duty to carefully oversee the management of the trust. In the event of their unwillingness or incapacity to carry out their duties, you can name successors for that role. Spouses are the lifetime beneficiaries of QTIP trusts. So, grantors then name remainder beneficiaries, e.g., their adult children from prior marriages/relationships.
You have always taken care of your loved ones during your lifetime. You can make sure they will always be provided for using a QTIP trust. Legal guidance can help.