A husband who has been married to his second wife for 17 years is concerned about protecting their estate after he passes away first. He wants to ensure that his children receive a fair share of the assets, but also doesn’t want to stop his wife from moving on with her life.
The couple agreed to transfer their property to their three children after the death of either spouse. However, if the husband passes away first, he is worried about how his second wife will manage their combined assets, including a 401(k), IRA, and two homes without mortgages.
To address these concerns, financial experts recommend setting up an irrevocable trust. This type of trust allows the couple to transfer assets out of their estate while still alive, but with certain tax benefits. An irrevocable trust can be beneficial in this situation because it gives the husband control over how his estate is managed after he dies.
According to Elizabeth G. Acevedo, director and shareholder at Weinstock Manion in Los Angeles, “When the first spouse passes away, the deceased spouse’s assets should be held in an irrevocable trust (referred to as a marital trust) for the benefit of the surviving spouse.” This type of trust ensures that the surviving spouse has control over the assets during their lifetime but cannot change how they are distributed at their death.
If the husband predeceases his wife, she will be able to continue using her share of the assets and selling and purchasing replacement properties within the marital trust. Upon her death, the remaining trust assets would be distributed equally among the three children.
It’s essential to note that setting up a trust without your spouse’s permission is not advisable. The couple should discuss their plans with each other before establishing any trusts or transferring assets. Additionally, attempting to set up a trust with separate assets without telling your spouse can lead to unintended consequences.
In conclusion, an irrevocable trust can be a valuable tool in protecting the estate from disputes and ensuring that everyone’s interests are protected.
Source: https://www.marketwatch.com/story/i-dont-want-to-stop-her-from-moving-on-with-her-life-my-second-wife-is-younger-than-me-if-i-die-first-how-do-i-make-sure-she-doesnt-cut-off-my-children-9c45ef1c