In many estate plans, the first spouse to die (usually
the husband) leaves his assets to the surviving spouse
(usually the wife). Assets also may go to a family trust,
in which the surviving spouse will be a trust beneficiary.
Often, the widow will receive income from that trust while
other trust beneficiaries (the children) have to wait to
get whatever’s left, after the surviving spouse dies.
Today, though, a widow might live to be 90 or 100 or even
older so the children will no longer be children by the
time they inherit anything-they could be grandparents by
then. This prospect is likely to lead to arguments as to
whether the trust fund should be invested for income, for
the surviving spouse, or for growth, for the children who’ll
eventually inherit.
Therefore, careful planning is necessary to avoid such
family discontent:
The family trust can provide for current income to be provided
to the children as well as to the widow. A “total
return” investment strategy can be encouraged
so that the trustee can invest for growth yet still liquidate
assets in order to provide, say, 5 percent annual
cash distributions to the trust beneficiaries.
Life insurance might be carried on each parent, payable to the children,
so that the next generation will get some
inheritance at the first death, without having
to wait until both parents die.
