When addressing estate planning, the situation of couples with children from previous relationships presents specific challenges. Striking a balance between providing for one’s own children while safeguarding the interests of the spouse requires careful consideration. The PDF above sheds light on an effective solution: Protective Trusts.
The Estate Planning Dilemma
Estate planning can become intricate when children from previous relationships are involved. Leaving assets outright to each other may inadvertently disadvantage your children in the long run, especially considering the passage of time and potential changes in circumstances.
A Protective Trust, designed for flexibility and security, offers a practical remedy. It permits the surviving spouse the right to reside in a property without disruption during their lifetime. Importantly, it prevents the portion held in trust from being passed to a future partner. Upon the second death, the trust directs the assets to your respective children.
Setting Up Your Protective Trust
Establishing this trust involves two essential steps:
- Title Adjustment: Alter the property title to “Tenants in Common,” creating distinct shares for each partner.
- Trust-Based Wills: Draft separate wills that confer your share of the property to each other On Trust. This empowers the surviving partner to use the property while ensuring eventual transfer to your own children upon the second passing.
The Protective Trust’s practicality lies in its adaptable provisions:
- Residence Flexibility: Grant the surviving spouse the freedom to change residences.
- Rental Option: Explore the possibility of renting out the property, generating supplementary income.
- Capital Access: Enable Trustees, often including the surviving spouse, to release capital for specific needs, guided by a “Letter of Wishes.”
- Dual Benefits: Safeguarding Assets and Mitigating Care Fees
Beyond securing your property for your children, the Protective Trust acts as a safeguard against potential care fees, enhancing your estate’s resilience.
It’s crucial to note that this planning strategy is exclusive to couples. Once one partner has passed away, leaving their assets to the surviving spouse, this approach becomes unavailable. The simplicity and efficacy of Protective Trusts emphasise your commitment to securing your family’s financial future.
In the realm of wills and probate, Protective Trusts offer pragmatic solutions. They empower couples to harmonise financial priorities, ensure their loved ones are protected, and leave a lasting legacy aligned with their intentions. By exploring this avenue today, you ensure a future that’s well-prepared and reflects your practical concerns.
Reach out to GoodLaw to explore protective trusts further and create a comprehensive plan tailored to your unique needs.
Check our other guide to protective trusts without the context of a remarriage.