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Estate and Trust Planning for Protection and Control – Part VII

Camarda Wealth Advisory Group
Estate Planning & Asset Protection

Why using joint titling as an estate plan is dangerous

Beware using joint titling as an estate “plan.”

Joint accounts are quick and easy, but offer little planning finesse (if you die all goes to your spouse, but if they remarry and jointly title and then they die, your kids get nothing), tax leverage, or protection from attack.

Joint titling – what if your spouse remarries after your death?

If you are married by the way, and insist on joint titling, make sure you title as “tenants by the entirety” and not as “joint tenants with right of survivorship” (a common error often seen at large banks and brokerage houses) if your State permits this.

Joint titling and inheritance risks to kids from previous marriages

Multiple marriages can be a real pickle. You want to provide for your current spouse, but may want to make sure that your own kids from the previous marriage(s) ultimately get your assets.

Simple “I love you wills” and inheritance risks to kids from previous marriages

Joint titling and simple “I love you” wills won’t do, since your spouse’s family will get the goods after she is gone if you die first. Ditto for her assets if she goes first.  I love you wills basically leave all to a spouse without controls or contingencies (like “whatever remains after the death of my beloved spouse is to be shared equally among my surviving children and grandchildren”).

How to avoid common estate planning blunders that can result in inheritance disasters

These situations are very common and can result in disaster if no planning is done.  What to do? In most cases, what you want is for your spouse to have the use of the assets during her lifetime if you go first, with your property breaking out at her death and going to your kids.  The same for her.  The survivor among you gets to use all of the money for life, with whatever controls you deem appropriate, but at the last death her stuff goes to her kids, your stuff goes to your kids, and if you had “new” kids together, some goes to them. 

Smart trusts can work well here, since the surviving spouse gets the use of the property – with as much control as you wish – but cannot give away or leave the property to anyone but your own darling children. 

Protecting kids’ inheritance when a spouse is as  young as your kids

But what if you find yourself in a “trophy wife” (or trophy husband, for that matter) situation, and are now married to someone much younger than yourself, perhaps as young (or younger) than some of your older children?

Odds are good that the new mamma/daddyo may live long enough to consume the assets, with nothing left for your kids when she goes. New spouse may even outlive them! 

The solution is to leave some of your assets directly to your kids when you go, or give them current income rights like you do for trophy spouses.  Not only is the latter more palatable from a new spouse’s standpoint, but your kids won’t have to wait until their own old age to see their inheritance…if any’s even left! 

Of course, the grand objective of this article series is for your family to have plenty left, and (as the Three Stooges used to say) how.

Tight and deeply considered estate planning is the linchpin, the chassis, the foundation of your grand family wealth structure. The launching pad, if you will, of your Great Family Wealth Rocket. But mind all the other estate planning content on this site, because we still need to build and fuel that rocket, and mission-control it without fail to target!

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Estate and Trust Planning for Protection and Control – Part VI
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Income For Life –Best Annuities for Seniors Retirement – Part II

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