(916) 572-6048

Should your soon-to-be ex-spouse be entitled to half the value of your grandmother’s wedding ring that you inherited?  The grim reality of divorce statistics mean that the greatest risk to your child’s inheritance probably isn’t estate taxes or probate fees, it is that their marriage may hit the rocks.

Mixing Money

It is the easiest thing in the world to put that fat inheritance check into your joint checking account, and then take that vacation you’ve been planning on, and then the shopping trip, and then your spouse’s bonus check comes in, and presto, and army of accountants and lawyers can’t untangle the financial threads.  The solution here is simple – put the money in a separate account just in your name.  If you have a living trust, list it as your separate asset and talk to your attorney about how to properly title the asset.

Title Turmoil

I know this is shocking, but how you take title to an asset has legal repercussions – like changing an asset from your separate property to community property.  In legal jargon, that’s called “transmutation”.  Estate planning attorneys will often discuss the tax advantages of making that change in title with their clients.  It is a little awkward in these discussions to discuss the impact this decision may have on a divorce situation down the road, and it is easy for couples to gloss over the importance of the decision to change the title.

Paper Panic

Keeping important papers might not be everyone’s favorite hobby, but when it comes time to prove your inheritance still exists, having documentation is the key to victory.  To prevail in court you’ll need your record of receiving the inheritance and you’ll need to trace where it all went.

The Advantage of Asset Protection

The above advice is good for your children living in California, and probably good for any community property state.  Some states however, take the view that everything should be divided equally regardless of its source.  That is where the unique Personal Asset Trust has an advantage.

The Personal Asset Trust is designed to keep your child’s money separate and protected in your child’s own trust.  The trust keeps ownership of the assets, and the legal walls around the trust mean greatly enhanced protection against not just a divorcing spouse, but also lawsuits and bankruptcy.  And because your child doesn’t technically own those assets they can pass them down to the next generation with little or no estate tax.

And that is how you keep your inheritance from wandering off.

Pin It on Pinterest