Planning For Beneficiaries of Multiple Marriages

Your current relationship may have very different family members and support needs. Older children may need help with college or job training, a car purchase, or financing on a home. Multiple Trusts can be the simple solution.

Planning Before Marriage

Make a plan for your assets. Make a list of assets that are best suited to earlier children and family members, and assets better suited to younger children. Your spouse/partner may be part of the process with full disclosure, or may be too emotionally affected to assist in the planning and establishment of the trusts.


If you make a spouse (or ex-spouse) the controller (Trustee) of the trust, you expect that the children will benefit eventually. Chances are good that events will go as planned, but... if your spouse ends up with another spouse, then the spouse dies, your children could be removed and the children of the new spouse could get it all. It might be best if you pick a non-spouse (non-future ex-spouse or widow) to be a trustee, such as your sister, brother, or best friend.

If you know that providing for your kids from a prior marriage will cause conflict, keep the trust and all arrangements private between yourself and the trustees.

Insurance and Retirement Benefits

If your first spouse is still named as beneficiary of your life insurance policy, you need to change that designation; unless it is part of your divorce agreement that your ex-spouse has to remain as beneficiary. If that is the case, you may want to purchase additional life insurance to benefit your new spouse. Keep in mind that if your new spouse inherits the proceeds, there is no guarantee your children (of the 1st marriage) will benefit. If your children inherit, your new spouse may not get anything.

One solution would be to create a Private Asset Trust and name that trust as the beneficiary of the life insurance proceeds. When you die, the proceeds will fund the trust and then you can specify how the funds are distributed. You could either give both your spouse and your children access to the trust funds, or you could give your spouse access alone until he or she passes, and then the trust goes to the children.

True Value of Retirement

The true value of retirement accounts. Older couples that are divorcing need to review their retirement accounts in terms of value, not the balance currently in those accounts. Because retirement savings are taxed upon withdrawal, the value is only about 65 percent of what the statement says it is. This review is especially important for couples divorcing in community property states, where assets are usually divided equally ? if one of you takes the house and the other one gets the retirement accounts, it may not be equitable over time.

True Value of Social Security

Not undervaluing Social Security. If you were married for more than 10 years, your ex-spouse has a claim to your benefits after age 62, which should be considered in alimony and asset division negotiations.

True Value of of Alimony

Be careful in valuing alimony. Counting on monthly payments from an ex-spouse after age 50 gets riskier with each passing year. To protect alimony payments, you may want to get a life insurance policy on your ex-spouse.

No Kids? - More Questions

Considering the kids. Even if the children are long gone, you may still want to a Private Asset Trust to protect their inheritance. You can create a Private Asset Trust now that will protect assets for your children in case of any divorce, including theirs.

Review and Modify the Trust Often

As children become older and mature, consider changing benefits, beneficiaries, and backup controllers (trustees). You can make a beneficiary that has attained majority (18 years old in most jurisdictions) into a trustee, even though they retain the beneficial interest. Just be certain that they are mature, familiar with business and contracts, and that they will be fair to other beneficiaries, if there are any.

Many Trusts

There is no limit as to how many trusts can be created. We suggest separate trusts for each significant asset, and/or a separate trust for each separate group of beneficiaries. Separation creates safety and reduces or eliminates conflicts.

Consult with an Estate Planner

If either of you have children from previous marriages, consulting with an estate planner is a must. Even if you do not have significant assets, you will need to update your will, powers of attorney, health care proxy designations, and more. An estate planner can also help you figure out how to use trusts for protecting assets for the children.

A Prenuptial Asset Protection Trust

Such an arrangement does NOT require permission, signatures, negotiations, or even disclosures to the future spouse. If you created an Asset Protection Trust in advance of a committed relationship, you would retain total control of trustees (yourself) and beneficiaries (you and the future spouse). If the relationship endures, things stay the same, or you modify beneficiaries to include children. If it ends, you simply remove the spouse from the list of beneficiaries.

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