Child from Prior Marriage / Relationship

Question: I have a child from a prior relationship but am now married to another woman. My wife is pregnant. I want to provide for my eldest child in case I die. Do I need a trust?

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Response: Perhaps. The standard estate planning template for a married couple is for each spouse to leave everything to the other spouse with the kids as contingent beneficiaries in cases where both the husband and wife die. That template does not necessarily work for blended families (i.e., one where at least one child of the couple has a parent other than the husband and wife). Taking your case as an example, if you die and everything is left to your wife, can you rely on her to provide for your child by another woman? That is the crux of the problem with blended families. So you are left with trying to balance the needs of children by different mothers as well as your wife in your estate planning decisions.

One option is life insurance. Perhaps there is a child support order in effect in your case already requiring that you maintain life insurance payable to the mother of your eldest child. Let's assume you have not been ordered to maintain life insurance for the mother of your child. The first priority is to ensure the basics of life are covered for your eldest child. If you are a younger man (which I assume from the question), term life insurance is a cost effective approach to cover necessary living expenses and education until the child reaches adulthood. Another administratively simple option is to name the child a transfer on death beneficiary of one of your financial accounts (in lieu of life insurance). Most states allow this type of designation for financial accounts and it's easy to put in place.

But a minor cannot take control of his or her own finances. If you die leaving your child the beneficiary of a life insurance policy, the child's mother mostly likely will be named guardian to hold and spend that money for the child's benefit. If you do not trust the mother to do the right thing, then a revocable trust that remains unfunded until you die can be useful. What a revocable trust does is allow you to name a successor trustee for after your death to administer any assets that have been set aside for your eldest child. The successor trustee, as opposed to a court appointed guardian (who would most like be the child's mother), will be the one to take control of investing and disbursing the trust funds for your child's benefit.

The foregoing are just general observations on a few fragmentary facts. An attorney must sit down with your and go over your entire family and financial situation to give a recommendation on whether or not a trust is right for you.