Estate plan for a second marriage


Q. My wife and I are both in our second marriages. We have adult children from the first marriages and no children together. When we each die, we want our children to receive an immediate inheritance and the rest to go to the surviving spouse. Would a QTIP trust help?
— In love again

A. We’re glad to hear you’ve found love again. We’re also glad you’re both thinking of your children’s futures.

Here’s what you need to know.

Spouses can leave their assets to anyone they want, and they can even leave out their spouse.

The surviving spouse can elect to receive a third of the estate by filing a complaint in the Superior Court within six months of the appointment of a personal representative of the deceased spouse’s estate, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

This is known as an elective share.

You’re asking about a QTIP, which is short for “Qualified Terminable Interest Property.”

“Individuals in second marriages often want to provide for their spouses when they die but also want to make sure that their own children inherit the remaining assets after the death of the second spouse,” she said. “They can accomplish this by having a marital trust for the benefit of the surviving spouse with the remaining assets in the trust going to their children after the second spouse dies.”

A QTIP trust is designed to preserve the marital deduction for estates that may be subject to estate tax, Whitenack said.

“The current federal estate tax exemption is $11.2 million per person and New Jersey eliminated its estate tax on Jan. 1, 2018,” she said. “However, both federal and state estate tax laws can be changed in the future.”

It doesn’t sound like a QTIP will accomplish your goals of an immediate inheritance for the children.

Instead, the spouses could enter into a postnuptial agreement, waiving their rights to an elective share or executing wills or trusts that designate assets to their children upon their death.

“They can also provide in their estate planning documents that an amount equal to one-third of the augmented estate will go outright to the surviving spouse and have the balance distributed to the children,” Whitenack said. “They can also designate their children as beneficiaries on IRAs and insurance policies instead of the surviving spouse.”

It makes sense for spouses in second marriages to consult with an estate planning attorney to determine the best plan to meet their goals.

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