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Tax Planning

Michael Morgan Apr 23, 2018

Without obtaining tax planning advice, and thereby benefiting from having a tax-effective estate plan, an individual who marries for a second time and has children from his/her first marriage could leave his/her new spouse and his/her children in a major dispute following his/her death.   If you leave your assets, such as real estate, shares and/or the funds in your bank accounts, “outright” to your new spouse in your will, then your children from your first marriage would not be protected – since your spouse could do whatever he/she wants with your assets after your death.   If you leave your assets “outright” to your children, then your new spouse would not be protected – since your children could do whatever they want with your assets after your death.  In either case, the resulting dispute may end up having to be resolved by a court.
 
Tax planning, however, could benefit you, your new spouse and your children from your first marriage.  Tax planning, when utilized to create a tax-efficient estate plan, could involve the use trust(s) to protect both your children and your new spouse, such as (i) a trust established during your lifetime for the benefit of your children (which trust would continue to benefit them after your death), and/or (ii) a “spousal trust” established by your will for the benefit of your new spouse following your death (i.e. during his/her lifetime) with the remaining assets in that trust upon his/her death to pass to your children of your first marriage.
 
Tax planning, when utilized to create a tax-efficient estate plan, can also minimize (or at least defer) taxes which would occur on your death.  Tax planning can, and should, be an ongoing process – and provide enough flexibility to make any changes which might be needed in the event that circumstances change in the future.  A tax lawyer can help navigate you through this process and help you determine what is the most appropriate tax plan for you.