ESTATE PLAN SETTLING A BRADY BUNCH ESTATE

WRITER: JOHN T. MARSHALL

As a kid, I thoroughly enjoyed watching — and re-watching — “The Brady Bunch.” Recently, I tried to watch an episode and found I barely could tolerate five minutes of the campy writing, terrible acting and the worst fake grass in the history of television. This does not alter, however, my appreciation for the show’s attempt to address the dynamics involved with blending two families into one.

Couples in blended marriages have to deal with numerous issues, including fear that death of one spouse means the children of the deceased spouse will be disinherited, whether intentional or not. This is not an unjustified fear, but it can be avoided if the couple crafts a comprehensive estate plan that provides for the surviving spouse and ensures the deceased spouse’s children receive an inheritance.

As part of a comprehensive estate plan, the blended couple should consider using a marital agreement (commonly referred to as prenuptial or postnuptial agreements), which can reduce or eliminate each spouse’s marital rights to their spouse’s assets.

Although people often dismiss marital agreements as draconian, when used as part of a comprehensive estate plan they can be powerful tools that promote family harmony. Without a marital agreement, even with careful planning, children of the surviving spouse could end up with only 30 - 50 percent of the deceased spouse’s estate through the exercise of elective share, family allowance or other statutory marital rights.

Blended couples also should consider establishing an estate plan that utilizes a QTIP trust. A QTIP trust is established upon the death of the first spouse and provides the surviving spouse with a regular stream of income plus distributions for the surviving spouse’s health and other basic needs, if necessary. The QTIP Trust is a powerful tool because the assets of the QTIP trust are distributed to children of the deceased spouse and are not controlled or distributed as part of the surviving spouse’s estate.

Let’s put this in perspective. Mike and Carol each have three children of their own. Mike’s parents died and left him the farm and other assets he wants his sons to receive, but Mike loves Carol and wants her to be taken care of if he dies first. Mike and Carol enter into a marital agreement wherein Carol waives her statutory rights to any of the property Mike inherited. Mike then creates an estate plan that leaves the family farm and other inherited assets in a QTIP Trust. After Mike dies, the QTIP Trust distributes all the income generated to Carol, plus it pays for her health insurance premiums and copays. When Carol dies, Mike’s three sons inherit all of the assets held in the QTIP trust, whereas Carol’s daughters receive the assets of Carol’s estate. The stresses placed on today’s “Brady Bunch” families rarely are solved with cliché parental advice. Instead, careful and practical estate planning can reduce the fear and mistrust that otherwise may exist, and instead, foster healthier relationships for all family members both during life and after death.

Advantages Of A Qtip Trust

• You can control distribution of property. That’s beneficial if you have children from a previous marriage because you can designate a portion of your estate to them.

• Even if you die first, you can pass assets onto your spouse without paying any estate taxes on them.

• None of the assets you put into the trust have to go through probate before they can be distributed.

• This type of trust is easy to set up, and you do not have to make all the decisions up front.

Source: finweb.com/retirement/5advantages-of-a-qtip-trust. html#axzz3YoxOVxbT