Protecting An Inheritance Of A Child From Their Spouse
For whatever reason, a major concern among parents doing estate planning is how to protect an adult child’s inheritance from their spouse. It may stem from an animosity or concern over a child’s problematic partner. A number of them are concerned about a divorce attacking and attaching the assets distributed to their surviving children. There are a few others who believe that heirlooms, property and/or inheritances should be kept within the family.
A basic choice one has is to leave the inheritance to just one spouse, i.e., their own child. Even if one’s child resides in a community property state, an inheritance would be considered individual property. Florida statutes define non-marital or separate assets as the property received by either spouse separately by bequest, descent, non-interspousal gift, or devise. Therefore, an inheritance is considered a non-marital asset. A spouse should not be entitled to any part of another spouse’s inheritance.
However, once that property becomes comingled or mixed with other marital assets then it may become community or marital property. The subject child will need to place the inheritance in an account in their name alone, and they will not be able to place any new funds in the said account. The child will need to be careful to keep their inheritance separate and should likely consult with an attorney to ensure they do not inadvertently comingle their property.
Likewise, sometimes the income produced by one spouse’s property can be considered community or marital property. Consequently, comingling the income from the inheritance with the inheritance itself could destroy its separate nature or status.
As an alternate strategy, a parent can leave their child’s inheritance in a Trust, naming them as Trustee. Creditors, divorcing spouses, and others will not have access to the child’s inheritance to the extent that assets are left in the Trust. Again, depending on the withdrawal rights and other terms and conditions set up in the Trust, the surviving child could withdraw funds and still comingle the withdrawn funds/assets or otherwise use them to benefit their spouse.
If there is a greater concern, the Trust can be set up with an independent third-party Trustee. Such an arrangement can limit the child’s access to their inheritance. Assets could only be disbursed or distributed at the discretion of the said Trustee; therefore, the Trust creator would need to be clear about establishing those withdrawal or distribution rights when drafting the Trust.
Another inheritance protection strategy can be taken by the adult child- they can sign a prenuptial agreement before getting married or ask their spouse to sign a postnuptial agreement if the inheritance is received during the marriage.
By careful thought or consideration and planning one can attempt to bypass a child’s partner in their estate plans. Consideration and provisions should be made in the event the child predeceases their parent and/or their spouse. Ultimately, consulting an experienced estate planning attorney can greatly assist the individual doing an estate plan in considering potential what-ifs and plan accordingly.
If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI, in Miami Lakes, Florida.