Because of my work as a trustee, or successor trustee, for several of my clients, Dennis Miller, the author of the book Retirement Reboot and the popular newsletter, Miller On the Money, recently contacted me for an interview. I thought PlanStronger™ readers would be interested in a few excerpts from our conversation about Trusts.
DENNIS: We've seen two situations where a couple was married for many years and the wife passed away. The husband soon remarried – and a few years later, he passed away. His second wife inherited everything. Shortly thereafter, the second wife died. While they agreed that when the second spouse died the inheritance was to be split among ALL their children, she changed her will and left everything to HER children. A friend remarked, "A good trust would prevent that from happening."
DAVID: This happens more than people realize. It is also a common fear among adult children of the blended families. It is not a hard thing to address and minimize from a legal standpoint, but it does require some difficult conversations. Once the conversations take place, then it's time for the attorney to prepare the proper legal documentation to see to it that wishes are fulfilled.
DENNIS: In today's world, it's not uncommon for a married couple to have three sets of children – his, hers and ours. I would guess that setting up a trust to be fair to all concerned is fairly common. What are some other situations where you suggest clients consider a trust?
DAVID: There are many situations where a trust would be worth considering. Some easy examples include when there is acrimony among the children of prior marriages. Another is when the deceased spouse wants the surviving spouse to be taken care of first, and have access to money that will ultimately go to the deceased spouse's children from a prior marriage.
The other 'big one' is when there is a child, adult or minor, who has a history of mental, substance abuse, or other problems that make it a bad idea for them to get a lot of money at once. Other children, like those with autism or Down's syndrome, will need someone to look after their assets for them. No pun intended, but, “special needs trusts” are “special.” Not all estate planning attorneys will prepare them. The language that goes into one of these trusts has to be carefully worded to avoid the loss of governmental benefits that the beneficiary may otherwise receive. In addition, the trusts also must do what they can to protect the children from financial predators.