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In this video I’m going to discuss the little-known, but most important decisions, a married person needs to make when they want to leave an inheritance for their surviving spouse, but they don’t want those assets to end up in the hands of their step-children - to the exclusion of their own children.

So here’s what I hear often, “Paul, my wife and I are in our mid-60’s. We got married about ten years ago and we each have two children - I have two of my own and she has two of her own. I’ve accumulated several millions of dollars of assets. And if I die before my wife, I really want and need to leave a significant portion of my estate for my wife because she’ll need money to live off of and who knows what kind of long term care needs she may have. And while I get along with her two children, I certainly don’t want to leave a bunch of assets to my wife, and then my surviving wife would turn around and leave those assets to her two children - I don’t want anything going to my wife’s children - I’d like to see my two children ultimately wind up with all of my estate that’s left behind after me and my wife die.”

So the married person who puts little thought into this often makes a big mistake. Husband dies leaving his $5 million estate to his wife - because he loves his wife and wants to provide for her. But then after Husband dies, wife - of course - decides to leave her estate to her children only - including the $5 million that she inherited from her husband - or, what’s left of it. Husband’s children wind up with nothing.

So it’s common knowledge in the inner estate planning circles that when a married person is in a second or third marriage and each spouse has children of their own, and a married person wants to provide for their spouse, it’s common for that married person, as part of their estate planning, to leave all or part of their estate to a trust. The concept goes something like this, “I’m going to leave all or part of my estate to a trust for my wife. My wife will be able to receive distributions from the trust, and when my surviving wife later dies, the remaining trust assets will revert back to my children.”

But you can’t stop there. We’ve got to take a look at some of the decisions that you make when you do establish a trust like this for your spouse.

0:00 You Don't Want Your Estate Going To Your Stepkids
0:21 Each Spouse Has Their Own Children
1:12 The Big Mistake
1:37 The Spousal Trust
2:17 Designating a Trustee or Co-Trustees
4:13 Surviving Spouse as Income Beneficiary
5:43 When Can Spouse Get Principal Distributions?
6:36 The Bottom Line