One of the critical issues I address with my married clients is this: "After the first death, will the surviving spouse have full authority over the trust? What kinds of changes, if any, can the surviving spouse make?"
This is especially important where there is a blended family (i.e., children from other relationships). Let's take an example - Mary and John Smith have three kids, one from Mary's prior marriage. If Mary dies first, will John have full authority to amend the living trust? What if John wants to exclude Mary's child from a previous relationship? Can he do that? Even if there are no children from a previous relationship, the question is still valid - Can the surviving spouse make changes?
This issue can be solved in several ways. First, the couple can agree that upon the first death, the entire trust becomes irrevocable. That might be a good solution in some situations, but in many cases, it might be viewed as too unnecessarily restrictive. Another solution is to create an "AB" trust that calls for a split of the estate upon the first death. One portion goes into the "B" trust (also known as the "Decedent's Trust" and other names). The balance goes to the "A" trust (also known as the "Survivor's Trust"). In this scenario, the surviving spouse is limited in changing the provisions of the Decedent's Trust, because it becomes "irrevocable" and unchangeable. That would be good if the goal is preserving the distribution scheme as outlined in the original trust.
It is important to address if/when the surviving spouse can use assets in the Decedent's Trust. Will they have full access to those assets? Only limited access? Should someone else act as trustee of the Decedent's Trust? Those things need to be considered and documented to prevent problems in the future.
Any experienced estate planning lawyer should discuss these issues with their married clients. If you are looking for an estate planning lawyer in the Santa Clarita area, please call (661) 414-7100 for a consultation.
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