Legal Tip 254: Should your spouse’s children with someone else be excluded from trusts?

A variation of Legal Tip 235 – Should Your Spouse’s New Spouse Be Excluded from a Trust you set up?

Legal Tip 235: Should Your Spouse’s New Spouse Be Excluded from a Trust you set up?


I have had a few clients ask that a discretionary trust be set up in a way that a spouse’s child with someone else (other than the current spouse) be excluded as beneficiaries of the trust. This is not just having the wording so that they don’t fall into the class of beneficiary, but actually having a clause to exclude them.

Example

Homer and Marge are happily married. Homer is having an affair with Maude Flanders after her husband’s recent death.

Homer gets Maude pregnant and she has a baby boy. The baby is Homer’s child but not Marge’s child.

A few years ago Marge set up the Marge Family Trust with Primary Beneficiaries being

· Homer
· Marge

And Secondary beneficiaries being children of the primary beneficiaries. With the wording being such that children of just one of them would qualify as a beneficiary.

But Marge was wise to this and, as she had caught Homer making sexy time with Edna Krapappel a few years ago so she included an exclusion so that any child that was the child of only one of them was excluded.

This way that ******* that Homer fathered next door is not able to benefit from the Marge family trust.