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Information on Estate Planning, Estate and Trust Administration and Unique Asset Planning

You can provide for your spouse through either an “outright” gift of all your assets, or through a plan to allocate your assets to a “marital trust” for his or her benefit.

The Outright to Spouse Approach. Under a traditional “outright” estate plan, a married individual names a surviving spouse as the individual owner of his or her assets upon death.  If you implement this approach, your surviving spouse would become the sole owner of all your assets following your death. This approach allows your spouse to become the new owner of all your assets, and to exercise all legal rights of ownership over these assets, including the right to re-designate these assets at or before his or her subsequent death. While this option provides the surviving spouse the most flexibility, this flexibility may actually be detrimental to the spouse.  In the event of your spouse’s remarriage, your surviving spouse may find themselves in a difficult position—they will either disappoint your children by naming their new spouse as the new beneficiary at death, or they will disappoint their new spouse by keeping your children as the named beneficiaries following death.  If you have a blended family, your spouse’s own children may place pressure on your spouse to change his or her estate plan following your death, and your children would not be included as beneficiaries of remaining assets.

The Marital Trust Approach. In order to address these concerns, some of our married clients choose to implement an alternative approach, which I will refer to as a “marital trust” option.  Under this alternative, at your death certain of your assets are transferred to a “marital trust” for the sole benefit of your surviving spouse.  The Trustees of the Marital Trust would manage these assets.  The Trustees could be a family member or friend and/or the surviving spouse.  These Trustees would have the legal obligation to make investment decisions, file tax returns, and make distribution decisions that are in the best interests of your spouse.  The Trustee is most often directed to make distributions to the surviving spouse not of a specified sum per year (although that is certainly legally possible), but to make distributions to the surviving spouse to allow the surviving spouse to maintain the standard of living enjoyed both of you during your joint lifetimes.  For example, if the two of you enjoy a standard of living requiring $X amount per year, the Marital Trust would distribute $X amount per year to the surviving spouse.  Following the death of the surviving spouse, all assets remaining in the Marital Trust are distributed according to your estate plan and not according to the surviving spouse’s own estate plan. When I speak with my widow or widower clients who have a Marital Trust structure in place, many of them are appreciative of the freedom it gives them to use the assets in the Marital Trust without having to address the burden of pressure from outside influences to re-designate assets.