There's a special kind of awkwardness that only divorced and widowed parents can understand. After starting to date again, you may eventually get serious enough with someone to bring him or her home to meet your children. Whether your kids are 5, 15, or 50, there's a big element of role reversal involved -- suddenly, you flash back to your teenage years, when you first had a date come over to meet your parents. In both cases, the questions are the same: Will they like this person? What will my date think of my family?

The romance of estate planning
When romance clashes with finance, things get even trickier. If two people enter a second marriage with substantially different amounts of money, the disparity can often foster uncertainty and friction between a person's children and the new spouse. Most people in this situation want to protect and provide for both their new spouse and their children, while avoiding hostile disputes and confrontations in the event of their death.

For most people, it's tempting to avoid legal formalities, instead counting on everyone involved to do the right thing when the time comes. This is an admirable sentiment, but it's often not realistic. Even completely moral and ethical people have difficulty wrestling with the give and take involved in the death of a loved one and the subsequent settling of an estate. Especially in marriages where each spouse has children from previous nuptials, the sheer number of family members involved necessarily divides loyalties. In addition, people who appear completely moral and ethical often behave unusually in situations involving money. As the proverb goes, "You never really know someone until you share an inheritance with them."

Nothing says "I love you" like a QTIP trust
For a wealthy family, the decision may also have significant tax consequences. Money left to a spouse can qualify for the marital deduction to the estate tax. But money left to children usually doesn't qualify for any deduction and can be taxed at rates up to 46%. This additional complication actually encourages the spouse and the children to work together; if less money goes to the IRS, more money is available to everyone else involved. However, if money is given to the spouse outright, the children have no assurance that they will ever receive anything from their parent.

To provide for the spouse but ensure that money will eventually go to the children, one can set up a marital trust to transfer part or all of the assets of the estate upon the person's death. Although the language used in marital trusts can vary widely, a couple of requirements must appear.

First, the spouse must receive at least the entire amount of income generated by trust assets throughout her life. Often, a marital trust will also give the spouse the right to receive principal distributions from the trust for certain reasons, commonly defined by the ascertainable standards of health, education, maintenance, and support. However, there is no requirement that the trust allow for such principal distributions.

Second, the trust must not contain any provision that takes away the trust assets during the spouse's lifetime. In some cases, the spouse is actually given the right to choose who will receive the trust assets after the spouse's death, although it is not required that the trust do so. Another option, called a special power of appointment, gives the spouse the right to direct trust assets to any or all of a number of particular people named in the document. For example, the spouse may have the right to have trust assets go to any or all of the children or their families, but not to the spouse's children or anyone else. This ensures that the spouse cannot divert trust assets to his or her own family.

Another benefit of using a marital trust: Even though the spouse does not get unfettered access to the trust assets, the estate is entitled to take a marital deduction for assets that go into the trust. The trust will often create a marital deduction for the estate, because the trust provisions create a qualified terminable interest. Marital trusts are sometimes called QTIP trusts, because they contain qualified terminable interest property.

To ensure that property in a marital trust does not escape estate taxation entirely, the spouse's estate will generally include any assets remaining in the marital trust. However, this inclusion might be unfair to the spouse's own heirs, because it could produce additional tax. To avoid this, the trust will usually include language requiring it to pay any estate tax incurred as a result of the marital trust. However, even if the marital trust ends up having to pay some estate tax, the result is often positive, because the tax is deferred until after the spouse's death.

There is a vital consideration to keep in mind. Some states give spouses certain rights that supersede language in estate-planning documents, including language that sets up marital trusts. The easiest way to ensure that your spouse will be bound by your marital trust's provisions is to have him or her give written consent to the trust. Depending on local law, you may have other options as well.

When considering a second marriage, few things seem less romantic than talking about finances. However, to ensure the financial security of your family, it's important to discuss financial matters with your prospective spouse and to make sure that you have the legal protection you need to cover all contingencies.

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Fool contributor Dan Caplinger welcomes your comments at dan_caplinger@yahoo.com.