When a Tennessee resident enters a second or subsequent marriage, his or her estate plan need to shift to accommodate this significant life event. Every time an individual goes through a major life change, the landscape of his or her interpersonal connections and asset distribution will be altered, and the need to make estate planning shifts will arise. When it comes to a second marriage, spouses often want to ensure that both their current spouses and their children from prior marriages are protected, without creating conflict between loved ones.
As an example, consider the needs of a man who owns a business, has children from his first marriage and is now married to his second wife. One of the man's adult children is involved in the family business, while the other has chosen to pursue a different career path. In such a case, a great tool to help him provide for all of his loved ones lies in the creation of a qualified terminable interest property, or Q-TIP.
When the man establishes the Q-TIP, he begins by transferring ownership of the company to the child who is involved in the business. By doing this through an intentional defective trust, the business is removed from the estate, but the man is able to retain control over the business. In addition, there is no tax due on any income that the man receives from the sale of the business. In drafting the paperwork that will guide the eventual distribution of the man's assets, it is possible to address any disparity created by the sale of the business to only one child.
Next, the man creates a life estate for his wife, which gives her the right to remain in the home for the duration of her lifetime. She is also able to receive the income from the man's assets, which she can use in any way that she likes. However, when she passes away, the home and the assets will pass down to the man's children. This example is just one of the myriad ways that a Tennessee resident can construct an estate planning strategy that meets multiple goals. While no two scenarios are alike, there is a solution that will fit virtually any set of estate planning needs.
Source: naplesnews.com, "Estate planning musts", Irv Blackman, April 20, 2016