In the world of estate planning, every situation or family is unique.
Situations that involve second marriages and live-in lovers can reveal competing considerations.
Fortunately, using the law of trusts can often help us accommodate the competing concerns and fashion a comfortable result for all interested parties.
For instance, let us imagine the following scenario. Larry and Joyce have each been married in the past, and they want to live together. They have determined getting married is unduly burdensome and not necessary.
Larry has two children from a prior marriage: Emily and Samantha. Joyce has two children from a prior marriage: Janice and Tom.
Larry owns the home and wants Joyce to be able to live in the house for her remaining single life, if she survives him. He wants to make sure his two daughters will eventually get the house.
What should Larry do?
Larry should create a trust agreement and deed his house or the real estate into his trust. This will avoid probate and can leave the house to Joyce for her life while single, then to his daughters in equal shares.
Larry will want to pay careful attention to the conditions that could cause the beneficial interest in Joyce to cease, such as remarriage or carnal cohabitation.
Also, Larry might want to consider naming one of his children as co-trustee. This is a good solution to a difficult problem.
Now, let us consider that Janice has special needs that entitle her to government assistance.
Joyce’s disposition will want to ensure that Janice’s share might be held in trust for her benefit, and perhaps that her brother, Tom, is the trustee.
If done properly, these funds can be made available for the benefit of Janice while at the same time not jeopardizing her government benefits.
Without the law of trusts, we would not be able to accomplish this good result.
Now, let us consider that Emily is a surgeon. For asset protection purposes, it would be advisable to strongly consider leaving her share in trust so that these assets would not be exposed to lawsuits.
Further, let us assume that Emily will never have children because she is infertile and she will not adopt. In this case, it would be wise to spell out in Emily’s trust that when Emily passes, the property will go to her sister, Samantha.
By the above example, we can see trusts can be used to control the flow of assets over time and to preserve government entitlements and protect against legal claims.
If used properly, trust law can prove a wonderful tool to manage competing concerns that naturally arise in the context of cases involving second marriages and live-in lovers.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local trust, asset protection, probate and estate planning attorney. www.mwinnesq.com