An inheritance can be a great thing. However, it can also be a bone of contention between the family members left behind, as they argue over their share of the estate and pay off creditors. This certainly isn’t what the family member leaving the estate behind had in might when she created her plan.
To forestall any potential inheritance problems for your beneficiaries, here are some things you can do today to protect the funds in your estate from creditors and predators.
Communicate Your Intentions to Your Loved Ones
One way to protect an inheritance to openly communicate your intentions with your beneficiaries, or the persons designated to receive your assets after you die. If they know in advance of your gifts, they have the opportunity to discuss these gifts with you—and by explaining them, you may reduce the likelihood that they’ll challenge these bequests in court. By letting your recipients know about your goals, you also encourage them to seek legal advice before making any decisions that might affect the status of their gift.
This is particularly true if one of your beneficiaries plans to get married someday. If you would like your child to pass on her inheritance to your grandchildren, then she might want to consider a prenuptial agreement before tying the knot. A well-drafted prenuptial agreement should protect that anything she inherits before, or after, the marriage. Her inheritance remains her separate property, to be passed on her heirs.
Establish A Lifetime Trust
Instead of distributing an inheritance outright from a will, you can protect your recipients further by leaving their inheritance in a discretionary lifetime trust. A discretionary lifetime trust lasts for the lifetime of the recipient. Since a trust owns your assets, instead of you personally, this creates a legal barrier between the property and a beneficiary’s creditors, lawsuits, or divorcing spouses; thereby protecting the inheritance for his use. If structured correctly, you can also allow inheritance assets to pass on to the beneficiary’s descendants without paying estate taxes.
Some additional ways of protecting an inheritance for your future recipients are:
- adding multiple beneficiaries to avoid lawsuits among family members,
- requiring that any trustee or person responsible for winding up the estate be an attorney or professional trustee, and
- making sure that a beneficiary does not hold a general power of attorney,
If you have questions about your inheritance or estate plan, send us a message or call us at (314) 454-9100.
Who is Steven Spewak?
Steven is an estate planning attorney whose client’s are confident and secure that they, their loved ones and their legacies are protected.
As an experienced attorney, Steven works with his clients in the areas of estate planning, trusts, probate, asset protection and business succession planning. He is known in the industry for providing exceptional client value and turn-key service.
Steven has maintained Martindale Hubbel’s highest preeminent AV rating as an attorney for more than 20 years, been recognized by St. Louis Magazine as a Five Star Wealth Advisor four times, and recognized by St. Louis Small Business Monthly as a top attorney for business owners to work with. Steven also regularly teaches continuing education courses in areas related to estate planning, asset protection and business succession planning to CPAs, financial and insurance advisors and other attorneys.