Article written by Trey T. Parker, Esq
Estate planning is more than transferring wealth – it is about people. Depending on your situation, this may include any or all of the following: spouses, children, grandchildren, extended family members, and friends. A well-drafted estate plan will address the circumstances of each of these potential beneficiaries, your goals and values, and coordinate them in a way that leaves a lasting legacy of which you can be proud. For many, the revocable living trust is well-suited for this purpose because it can be tailored to provide for the people you love while also protecting them from remarriage, failed marriages, creditors, and themselves. In other words, it will leave your wealth to whom you want, when you want, and how you want.
For married couples, the primary concern in estate planning is typically to ensure that the surviving spouse will have access to all of the wealth for his or her needs. A secondary concern is to ensure that the other beneficiaries, such as children, will remain beneficiaries if the surviving spouse remarries. Through the use of a revocable living trust with special marital sub-trust provisions you can achieve both. The special marital sub-trust provisions, often referred to as a QTIP Trust, allows the surviving spouse to have access to all of the wealth for his or her lifetime needs, but the surviving spouse is unable to redirect the wealth to his or her own children, a new spouse, etc. This type of estate planning may be useful for any married couple, but is especially relevant for young couples and blended families.
A revocable living trust can also contain provisions that protect children and other beneficiaries from failed marriages, creditors, and themselves. If you establish sub-trusts for each of your beneficiaries, you can provide them with something akin to safety-deposit boxes in which only they or a trustee selected by you has the key. The beneficiary of the sub-trust is not vested with legal ownership, and therefore a spouse of the beneficiary cannot claim the assets in divorce, a creditor cannot attach the assets in lawsuits or bankruptcy, and the assets are not subject to spend-down provisions for long-term care for the beneficiary. In addition, the terms can provide incentives to a productive lifestyle by stopping distributions if the beneficiary becomes involved in destructive behavior, such as drug or alcohol abuse, gambling, or excessive spending.
While there is no “right” or “wrong” way to plan your estate, there are methods that are better suited to achieve your goals and objectives. Therefore, it is important to work with an estate planning attorney who has experience and expertise in this delicate area so you are aware of all your options. After discussing your unique circumstances, goals, and options, you will be able to complete an effective and efficient estate plan that is a caring and loving act for those who matter most.