Legal Question in Wills and Trusts in North Carolina

Its up to your father to dispose of his assets as he sees fit. If he wants to give it to the current wife, then its his choice. Children do not have a "right" to inherit anything from their parents and if your father wants to leave it all to the second wife, or to charity of some kind, that is his choice. He does not have to leave you or your sibling a dime if that is what he wants. You thus should not be acting like you have a right to receive these funds as you don't.

Assuming that your father wants to benefit you and your sibling, your father should have set up what is called a marital A-B trust. It works like this - at death, 2 trusts get set up, a marital trust for the wife and a family trust. How funds and property is allocated is for your dad to decide, but he should leave enough in there to take care of the wife.

The family trust will provide that wife can invade the family trust, if necessary. That does not mean that wife can impoverish herself by giving away the assets in her trust so she can come begging for more. The wife cannot change the terms of the family trust at all and upon her death, you and your sibling will inherit.

The terms of the marital trust could be changed by wife, but at least the damage as to how much she can give away will be limited.

The other way to do this is, if your father has no concern about tax issues, is for just your father to set up a living trust for himself only. The trust becomes irrevocable upon his death. In the trust, he can name someone other than wife to be successor trustee. The trust can provide for the wife to receive distributions of money at regular intervals to be used for her care and support. Upon her death, you and your sibling will inherit. The nice thing about this trust is that the second wife never gets control of the assets. Rather, she just gets periodic disbursements of money. Ideally, this will be enough for her to live comfortably on and the only thing that can go to her children is whatever has been disbursed to her.

A third option, if your father has the resources to do this, would be to start to make annual gifts to you and your sibling. Your father can gift up to $13,000 per year to you and another $13,000 to your sibling. If he wants to give more, then his wife can gift up to the same amounts - so that is $52,000 a year that can be given if your father is able to do this.

Gifting is a great idea - it allows your father to have the joy of giving in his lifetime and you and your sibling not only get the benefit of the gi8ft to use now instead of waiting until your father's death, but you also get to show your father how grateful you are for the gift. Its a win-win. The problem is that I don't know what resources your father has or the kind of assets that he has.

Regarding taxes, Congress made a deal in December of 2010 which raised the estate tax limit to $5,000,000 (5 million) ($10 million for married couples). The problem with this is that the law is only good until December of 2012. Depending on the outcome of the 2012 elections, this can change.

Since nobody can predict right now what Congress will ultimately do, your dad, given his age, might want to set up the marital A-B trust because of the tax issues if he has that much money around.

As you are concerned, you and your sister need to sit down with your father and review what he has to make sure that it meets your father's estate planning needs and that it provides for your inheritance if that is what your father wants.

If it does not, then your father needs to sit down with an experienced estate planning lawyer, preferably one who knows about the tax law issues to minimize any estate taxes. There are other vehicles out there for very wealthy people (most of my clients don't fall within this group so I don't do the extended estate planning work).