Question:

My mother is on a second marriage. What kind of trusts can you set up to protect her money from a previous marriage?

Response:

The answer depends a bit on what risks your mother is concerned about: Her husband’s long-term care costs? His debts and expenses? His making a claim against her assets if they should divorce? His making a claim against her estate should she predecease her? She might also be concerned about what happens after she dies in the event her husband needs long-term care, gets remarried, or simply passes what at that point belongs to him to his own children.

It’s best that couples discuss these issues prior to marriage and enter into a prenuptial agreement. If they have not done so, it’s still makes sense for them to do so after they are married, though depending on the state, a post-nuptial agreement may or may not be legally enforceable. But even if it’s not honored in the state where your mother and her husband live, it can serve as a good record of their wishes and intents should there ever be a disagreement about these in the future, perhaps between their respective children.

In addition to these agreements, your mother should keep the bulk of her assets separate from her husband and create her own estate plan with a will, revocable trust and durable power of attorney. In the absence of a prenuptial or post-nuptial (if enforceable) agreement, your mother’s husband may have spousal rights against complete disinheritance should he survive your mother. These differ from state to state, but never entail taking the entire estate.

Your mother may want to provide some protections for her husband, such as the right to live in the family home, while making sure that when he dies it passes on to her family. Your mother may be able to achieve further protection by transferring assets to her children or into an irrevocable trust. But doing so means loss of control for her and may have adverse tax consequences for her children.

I would recommend that your mother consult with a qualified estate planning attorney to determine which options make the most sense for her in her state.

Related Articles:

Why Prenuptial Agreements are Necessary in Second Marriages

Planning for the Second (or Third or Fourth?) Marriage or Relationship

Life (and Planning) Can Get Complicated