It’s an all-too-common story, an adult child is unhappy that their stepmother inherited their late father’s estate. Even if the father had a last will and testament that indicated his wishes for his wife to be cared for and for any remaining assets to ultimately pass to his children, they were just wishes, lacking any legal teeth. So, while it is still possible those wishes will be carried out, there is no legal means of ensuring that will be the case. Perhaps the widow remarries, complicating the situation further, and most assuredly leaving her deceased former husband’s children without any inheritance.
While the adult children could challenge their late father’s last will and testament, these claims are often difficult to prove and may depend on the specific circumstances of the case.
In hindsight what the father should have done, in addition to purchasing a last will, is to establish a Qualified Terminable Interest Property Trust (QTIP). A QTIP is a type of irrevocable trust that allows a person to provide income for their spouse after their death, while preserving the assets for their children or other beneficiaries. A QTIP trust can be useful for people in second marriages who want to balance the needs of their current spouse and their children from a previous marriage and would have made all the difference in the case of the family described above.
Had the father purchased a QTIP, the needs of his wife and his children would have been met, and there would have been a provision for what happens in the event she was to remarry. However, QTIPs do have some drawbacks. For instance, QTIPs can’t be changed, which can be a drawback if your family or financial situation changes significantly. Also, they can be complex for the trustee to manage, and restrictive limiting the surviving spouse to the income of the trust assets, not allowing them access to the principal.
In a world where unfortunately, many marriages end in divorce, the QTIP is a ready solution for ensuring your wishes and the best interests of everyone involved are met. To learn more about QTIP trusts and other estate planning strategies, schedule time with your employer sponsored Francis financial planner and ask them to help you prepare your estate plan.