A marital trust, sometimes referred to as an “A” trust, is a unique tool that is particularly helpful for estate planning for blended families. Remember, a trust is a legal arrangement in which the grantor, the person establishing the trust, transfers ownership of their property or assets to a trustee, who then manages and controls the assets for the benefit of the named beneficiary. A marital trust is simply used to benefit the surviving spouse of the person who dies.
There are many reasons for creating such a trust– to provide asset protection for the surviving spouse, or to ensure that your children are the ultimate beneficiaries of your estate after your spouse dies. If your spouse remarries after your death, and you leave your entire estate to your surviving spouse, the new spouse could make claims on the inheritance you had left, either in a divorce or by demanding a share at the death of your surviving spouse. If you leave the inheritance to your spouse in a marital trust, the assets would be protected from the claims of a future spouse.
In today’s world, there are many “blended” families, which is a term used for families with stepchildren. In most states, stepchildren have no legal claim to an estate should a stepparent die intestate, meaning without a will. In blended families, the natural parent of the children often wants to ensure that his or her children ultimately receive the benefit of their wealth. The natural parent can establish a marital trust that provides for all income from the estate to go to the surviving spouse (the stepparent of their children). Then, upon the death of the stepparent, the remaining assets go to the children. In this manner, the surviving spouse is not disinherited and the estate ultimately goes to the children.
Even if your family is not currently a “blended family”, circumstances can change and it is always makes sense to plan for the unexpected and protect your loved ones.
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- Dangers of Do-It-Yourself Estate Planning - August 1, 2021
