Statistics tell us that over half of all Americans will be part of a blended family at some point in their lives. If you are currently part of a blended family, you are likely already aware of the challenges that come from combining two families into one. Unfortunately, those challenges do not always disappear after death. Which is why a well thought out estate plan is crucial for anyone who is part of a blended family. If you are currently part of a second (or subsequent) marriage, you undoubtedly wish to provide for your current spouse in your estate plan. At the same time, you may wish to protect assets that are intended for your children from a previous marriage. A Qualified Terminable Interest Property, or QTIP, trust may be the answer.
Traditionally, a spouse would leave all of his/her assets to the surviving spouse with the understanding that the surviving spouse would then pass those assets on down to the couple’s children upon his/her death. That system only works, however, if you remain married to the mother/father of your children until your death. If you divorce and then remarry it creates additional considerations. You could leave everything to your spouse and count on him/her to leave those assets to your children upon death. However, doing so would require you to have absolute faith that your spouse would follow your wishes and not deplete the assets. Once you are gone you will have no way to ensure that your wishes are honored. A better option is to make use of a QTIP trust in your estate plan.
A QTIP trust operates in basically the same way as any other trust. You will need to appoint a Trustee to oversee the administration of the trust and to manage the trust assets. The majority of those assets will be held in the trust for your children. However, your spouse will be able to use the income generated from the assets during his/her lifetime. You may allow your spouse access to a portion of the principal, while keeping the majority of the principal will remain inaccessible to your spouse during his/her lifetime. Furthermore, your spouse will have no say in how the trust assets are invested or managed. Upon the death of the surviving spouse, all of the trust assets are distributed to the children.
If you have additional questions or concerns relating to a QTIP trust, or estate planning in general for the blended family, Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.