Estate planning for a second or subsequent marriage can be complicated, especially if you have children from a previous marriage. Finding the right planning technique can not only circumvent family tensions, it can also help you pass more assets to the children at a lower tax cost.
A qualified terminable interest property (QTIP) trust can maximize estate tax deferral while benefiting the surviving spouse for his or her lifetime and the children after the spouse’s death. You also can provide your spouse with as little or as much access to the trust’s principal as you choose. Because of the marital deduction, no estate taxes are due at your death. But the entire value of the QTIP trust will be included in your spouse’s estate. When you spouse dies, the remaining QTIP trust assets pass as the trust indicates, typically to your children.
Combining a QTIP trust with life insurance benefiting your children or creatively using joint gifts can further leverage your gifting ability.
Consider a prenuptial agreement to further help you achieve your estate planning goals and address your children’s needs. A pre-nup requires that certain legal requirements be met, so it is essential to consult with an attorney.
Developing a second marriage estate plan can be both complicated and an emotional experience. If you have questions or are now ready to move forward, contact me at SDitman@berdonllp.com or your Berdon advisor.
Scott T. Ditman, a tax partner and Chair, Personal Wealth Services at Berdon LLP, advises high net worth individuals and family/owner-managed business clients on building, preserving, and transferring wealth, estate and income tax issues, and succession and financial planning.