Complex Wills

A Complex Will is necessary for clients who prefer not to transfer their assets into lifetime (revocable) trusts but desire to maintain control or place restrictions on the future distribution of those assets after their death to their beneficiaries via one or more testamentary trusts.  For example, in blended families resulting from second or third marriages, each spouse may desire planning that ensures the surviving spouse remains financially secure after the death of the first spouse but in a manner that allows each spouse to maintain control over the ultimate distribution of their individual assets after the death of the surviving spouse.  In such a case, a testamentary marital trust could provide income (and principal) distributions to the surviving spouse for his or her life with the remainder passing to the children of the first spouse to die (either outright or in further trust(s)).

A Complex Will also allows younger couples with significant wealth and young children to plan when, how and under what circumstances assets will be distributed to their children should both parents predecease before the children reach specified ages.  For example, a Complex Will might establish a single pot trust to sprinkle income to the children for health, education, maintenance and support until the youngest child reaches a specified age.  When the youngest child reaches the age specified in the pot trust, it could be divided equally into a separate trust for each child (or surviving issue of that child) that includes further conditions on distributions of income and principal, such as graduation from college, marriage, purchasing a home, starting a bsuiness, specified ages, etc.  A Complex Will also can establish a special needs trust for a child with a disability that will prevent the child from losing government assistance.

Additionally, if wealth transfer taxes are a factor, a Complex Will also can create testamentary trusts, such as a bypass trust to utilize the decedent’s basic exclusion amount ($11.18M in 2018), a “QTIPable” marital trust that qualifies for the marital deduction, and/or GST exempt trust, to aid in eliminating or minimizing federal wealth transfer taxes.  Even if federal transfer taxes are unanticipated at the time the plan is executed, a complex will should provide flexibility in uncertain times by allowing post-mortem tax planning through disclaimer trusts, or, with marital trusts, by including provisions for allowing the personal representative to make a partial QTIP election.