When you marry again and have children from a previous relationship, it is important to take steps to be sure that at least a portion of your assets are protected for them.
When it comes to protecting assets for your child, it’s usually best to be proactive about it and make it a priority to address the matter before you remarry. Life can take us down unintended paths. We never like to think that bad things will happen to us, but unfortunately, it’s not how life works.
We had a client whom we’ll call Jane. Jane was a widow with one child, a son age 13, when she married her second husband, Chuck. Jane wanted to be certain that some of her assets were protected for her son should something happen to her. This was a good move on her part since her son was not the biological child of her second husband.
Any parent who wants make certain that his or her child is financially protected can do so with a properly drafted trust. Of course, we want to trust spouses and family to do right by our children, but changes in financial circumstances, ill will, or basic human selfishness and greed too often cause people to find ways to justify why they want to take funds you intended for your child.
What we did for Jane was set up a living trust that benefited her son (as well as her husband and other family members). Jane’s brother was named as the Successor Trustee of the trust with exact instructions on how the funds were to be distributed to her minor son and how and when to transfer the assets to her son once he reached adulthood.
As a trustee, Jane’s brother has the legal responsibility to act as fiduciary, requiring him to put the beneficiary’s (Jane’s son) interests first.
Also, handling all of this through a living trust will help you avoid probate, which can take a very long time and cost a lot in some states. A good estate-planning attorney, one highly familiar with living trusts, can provide guidance and advice as to which way is best for your particular situation.