Financial planners working with clients on estate planning have had a new challenge put to them in recent years: how to advise a family where one or both parents have remarried and have children by both marriages, sometimes called a "split-level" family, The Wall Street Journal reports.

Some parents may be inclined to leave all or most of their estate to their current spouse because of the unlimited marital deduction for bequests to spouses. On the one hand, that's good, particularly if there is a child by that marriage who will need a college savings fund.

However, by leaving everything to their current spouse, they run the risk that the surviving spouse may, in turn, pass that money on to their own children. And parents shouldn't forget their older children, many financial planners agree. "When you have a second marriage, the kids from the first marriage always are at risk of losing their inheritance," said Jere Doyle, senior vice president at Mellon Financial.

One popular solution is to set up a trust, often with stipulations, such as that an offspring must complete college before receiving an inheritance. And often, trusts are set up as qualified terminable-interest property trusts that pay a surviving spouse an annual income, with the balance going to children after their death.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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