Husband has no children; Wife has prior marriage child. Husband/Wife estate 50/50 investments/real estate and exceeds estate exemptions. Husband wants control of estate, all assets available for his lifetime needs, to minimize his taxes, is against any gifting while alive, against irrevocable trusts. Husband wants his estate to go to Wife and then her child but only if he doesn’t need it all (or changes mind). Husband is Wife’s first priority but Wife wants child (and grandchildren) to inherit from Wife’s estate, after Husband and Wife die. In AB trust, after Wife dies, Husband can use testamentary power of appointment to reallocate assets between survivor and AB trusts, thus changing Wife’s bequests to child. Is AB trust right choice to ensure Wife’s child’s inheritance if Wife dies first? What other trust(s) or provisions should Husband and Wife consider to meet both their desires?
One way to answer the question is to invoke a remarriage provision in the trust. A remarriage provision states that the assets stay in the trust. In the event surviving spouse remarries the assets in the trust would be locked up, unless the surviving spouse enters into a pre marital agreement with the new spouse. Depending upon the language you want to use, the surviving spouse must protect the assets for the benefit of the surviving children and/or grandchildren. The assets could not be used to benefit new spouse.
This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.
Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
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