Blended families can be challenging in many ways. In many ways, you are forging a new path. You have commitments and responsibilities from your prior relationship (such as your children) and now you are taking on new commitments and responsibilities in this new relationship (such as to your new spouse).
Often, issues arise when spouses enter a marriage where there are children from a prior relationship. Typically, you want to care for the new spouse without leaving out your children. The best way to do this is to keep your property separate during life and treat the new spouse like royalty at your death.
Much of the wealth and income of royalty is derived from property to which they do not have access, but from which they get income. For example, in 1337, King Edward III set up the Duchy of Cornwall for his son, Prince Edward. Today, that Duchy consists of 140,000 acres in 25 counties including agricultural, commercial, and residential property, as well as a sizable financial investment portfolio. The Duchy has been passed down through the generations to whoever is heir to the throne of the United Kingdom. However, the beneficiary of the Duchy only receives the income from the property and may not sell off the assets for his or her own benefit. In 2004, the Duchy produced income of £11.9 million, roughly $22.8 million, for Prince Charles.
Similarly, you can set up your estate plan so that at your death your assets go into a trust for the benefit of your new spouse. Your new spouse could get the income from the assets, but would not be able to sell them and deprive your children of the benefit of those assets after the spouse’s death. If desired, a trustee can be given the discretion to dip into the principal for the spouse’s benefit if he or she really needs money, say for medical care.
By leaving assets in this manner, you preserve your assets for your children, while providing for your new spouse in the event of your death. This has the added advantage of preventing your assets from becoming marital or community property assets if your new spouse remarries after your death. Further, such a trust will qualify for a marital deduction so no estate taxes would be due at your death, only at the death of the spouse.
Blended families are a unique mixture of needs and desires. There are many methods and strategies which you can use to satisfy both those needs and desires. A qualified estate planning attorney can help guide you through the legal thicket that faces you.
Ronald “Chip” Morrison, Jr. is a Board-Certified Specialist in Estate Planning and Administration by the Louisiana Board of Legal Specialization and a member of the American Academy of Estate Planning Attorneys. He has been engaged in Louisiana trusts and estate law for more than 18 years. Our firm serves clients throughout southern Louisiana. To learn more about how you can achieve your estate planning goals, please call (504) 831-2348 or visit our website at www.morrisonlawplc.com.
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