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| DISINHERITING STEP-GRANDCHILDREN Given today's social scene with so many blended families, it is sometimes difficult to wade through the way you want your estate to be distributed. A Baltimore couple came in for estate planning in the spring of 1993 and told me that they had an estate of $300,000 and their family consisted of four children, all married. Two of the children had children. Two had none of their own; but, had step-children. So, the family consisted of three generations, Gen I, Gen II and Gen III. The parents wanted only their issue to benefit from their estate. (Nothing to step-grandchildren.) But, they wanted the estate to go to their four children "with right of survivorship" prior to going to grandchildren. The only way to accomplish this goal is to use a trust. In this case, I recommended a Spendthrift Trust; but, we sometimes call it a "Protect Assets for Kids Trust." (PAKT). To start with, the parents (Gen I) would place their assets into a Living Revocable Trust which would become, at the death of the last parent, a PAKT. Instead of benefiting the children directly, we would conduct a generation skip and make the trust for the (eventual) benefit of the four grandchildren (Gen III) (excluding step-grandchildren). But, during the children's lives, income would go to the children (Gen II) with right of survivorship. So, the grandchildren would not benefit until all the children had died. Meanwhile, when all four children (Gen II) were alive, all would receive income. When one died, three would receive income, etc. Until the last of Generation II died, the grandchildren would receive nothing. In addition, no step-grandchild would benefit ... and no spouse in Gen II or Gen III would benefit. |
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