How To Ensure Your Children Inherit Your Property after Your Spouse Dies
Proper estate planning is at the core of making sure that your property is transferred to the right family members at your death. In the case of order of inheritance, everything depends upon the state’s laws where you live and the type of estate planning you engage in to provide for both your spouse and children. Two of the best options for making sure your children inherit your property after your spouse dies include contractual wills and living trusts like the A/B trust.
Making Sure Your Children Inherit with a Contractual Will
One option for using estate planning to ensure your children inherit your property after your spouse dies is a contractual will. A contractual will is a mutual will drafted by both spouses
that states the two of you agree not to change your will once the other spouse dies. Typically a contractual will is either two mirrored wills for the two spouses or is a single distribution will. While this will guarantee that your children inherit anything that is left once your spouse dies, it cannot guarantee that anything will be left. After two probate proceedings and estate taxes, as well as bills to creditors and medical debt, an entire estate is sometimes completely spent by the time your spouse dies. Furthermore, wills become public information once they go through probate. This means that any creditor or salesman can see exactly how much is in your estate.
Living Trust Option: The A/B Trust
A better and more substantial solution is an A/B trust. An A/B trust is a form of estate planning called a living trust, which is done before you die and sets up a series of trusts for after you die. There are two different phases that an A/B trust goes through. The first phase is called the A trust, and the second phase is called the B trust.
The A trust is a mirror revocable trust that assigns you and your spouse as the initial trustees. This means that while the property is not in your immediate possession, you still have enough control to ensure a comfortable life and growth of your assets. This trust is privately created, ensuring that no one will ever find out the value of the trust assets. The structure of this trust will remain in place until either you or your spouse dies.
Upon the death of either you or your spouse, the B trust takes over. The B trust is an irrevocable living trust designed to care for the remaining spouse during their life. The trust is run by someone other than the surviving spouse, ensuring tax protection. Best of all, everything from the A trust is immediately poured over into the B trust, ensuring no probate proceedings.
When your spouse dies, the beneficiary provisions in the B trust take over, ensuring that your children continue to receive payments from the trust. If you would prefer that the children inherit outright, you can leave instructions in the trust document that the B trust be dissolved with equal distribution to your children upon your spouse’s death.
Consult an Estate Planning Attorney
Remember that estate planning can be complex. Regardless of the method you choose, the drafting of the documents and filing of the forms must be done in a very specific way. To ensure your wishes are understood and followed, contact an estate planning attorney and set up a consultation.