What happens when a
trust is set up during the lifetime of a surviving spouse, and that spouse
later remarries? Spousal
trusts are often established in order to minimize estate
tax or to provide a stream of income to the spouse during lifetime. Upon death
of the spouse, the principal in these trusts usually transfers to the children
of the first marriage. In the event of remarriage, what happens to the
distributions from these trusts? Continuing the usual distributions might
result in unanticipated consequences, such as unintentionally disinheriting the
children of the first marriage, or leaving the surviving spouse vulnerable in
the event of remarriage. To prepare for this scenario, a trust for the benefit
of a spouse can be drafted such that, in the event of remarriage, a pre-marital
agreement must be executed which requires distributions from the trust to
remain separate property. Or, distributions could be tweaked upwards or
downwards based upon the marital status of the surviving spouse.
If you have questions about spousal trusts, contact our San Francisco Estate Planning Attorneys.
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