Dear Trust Officer: I’m financially secure, and have married for the third time. Lately, my children from the first two marriages have been asking about their inheritances. They seem to be concerned that my spouse—or perhaps a future spouse—might freeze them out. How might I allay their concerns?
— THIRD TIME’S THE CHARM
DEAR THIRD TIME’S THE CHARM:
In situations such as yours, we recommend looking into the Qualified Terminable Interest Property Trust, or more commonly, QTIP Trust. The trust is “qualified” for the marital deduction from the federal estate tax provided the surviving spouse is a U.S. citizen. The trust is “terminable” because it ends at the spouse’s death, and the spouse typically doesn’t have the right to change who gets the property at that point. In short, the inheritance for your children would be secure.
Another benefit of the QTIP trust is that the executor can elect a full or partial marital deduction, depending upon what’s best for tax purposes. That flexibility is especially welcome during these volatile times when asset values can change suddenly, and the amount exempt from federal estate tax is scheduled to drop in 2026.
Do you have a question concerning estate planning? Send your inquiry to Martha L. Linsner at email@example.com.