Law made easy
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trusts and estate planning
Martin Shenkman


Planning for Second Spouses


Trust planning is essential when dealing with second, third, etc. marriages. Start with pre/post nuptials. If they have them, you must plan accordingly. If there are no nuptials, you can do what the clients want. The most common scenario is to leave everything in a trust to the current spouse, and upon death of the 2nd spouse, everything goes back to kids from first marriage. What is often missed is distribution in the investment. Let’s say a 7% distribution rate under a uni-trust formula. If your wife is young, the chance of your kids seeing any money at a 7% withdrawal rate is not likely. Watch the principle invasion clauses in the will and trust. The trustee should not be able to make unlimited principle distributions. You may want to limit everything, including principle distributions to maintain principle standard of living. Some people throw in a clause for emergencies. But what is considered an emergency? Think everything through. Furthermore, even if you plan the best QTIP for your client, if they sign a standard power of attorney, the qualified terminal interest policy becomes essentially worthless because power of attorney gives the power to gift.


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