Surviving Spouses- Balancing Protection and Flexibility

When designing a trust, many want to protect their heirs without overly restricting a surviving spouse. Limiting a surviving spouse’s ability to change the trust can ensure assets reach the intended heirs, such as children from a prior marriage, but it comes with trade-offs. For example, complex structures like AB trusts or QTIP trusts offer strong protection but require significant administrative effort, including separate tax filings and asset allocation at the first spouse’s death. These structures may also forgo tax benefits, like a step-up in basis at the second spouse’s death. Instead, alternatives like specific bequests at the first death or life insurance policies can provide for heirs without burdening the surviving spouse or delaying their inheritance. This approach reduces conflict and administrative complexity while addressing concerns about blended families or remarriage.

If you're worried about your spouse remarrying and considering limiting your surviving spouse's ability to change the trust, consider this: What if the shoe were on the other foot? You married this person for a reason. If you trust them to do the right thing now, trust that they will do the right thing later. Is this limitation worth the additional administrative burden and costs, and the elimination of the step-up in basis on your property after the second death? That step-up in basis could result in significant tax savings, especially if your spouse is younger than you.