Are you concerned that your family wealth could fall into the hands of outsiders after your death? Have you considered the financial impact of your child getting divorced or passing away after they have inherited your estate? If a creditor sues your child’s spouse, can they get their hands on your child’s inheritance?
Unless your estate plan specifically protects your children from these hazards, the answer is an unfortunate “yes”. Fortunately, we typically incorporate protective provisions into our trusts to protect against these exact situations. We refer to these provisions as Family Access Trusts.
A Family Access Trust provision can be inserted into your trust to clearly distinguish your child’s inherited assets as his or her separate property as opposed to marital property. This distinction is vital to preserve your hard-earned assets for the sole benefit of your family. For example, in the event of divorce, marital assets are typically divided equally among the spouses while separate assets remain the sole property of the respective spouse. Likewise, if your child’s spouse gets sued by creditors, your child’s separate assets are outside the reach of those creditors.
This provision also preserves your estate for the benefit of your grandchildren if your child dies after inheriting your estate. Rather than risking your child placing their inherited assets into a joint account with their spouse, the Family Access Trust holds title to such assets as the separate property of your child. If your child subsequently passed away, these assets are preserved for the sole and exclusive benefit of your grandchildren. You even get to nominate who will serve as trustee to ensure these assets are used in the best interests of your grandchildren.
If your trust has not been updated recently and you are concerned whether it contains this type of protection, please call Vikki at 405-843-6100 to schedule a free Consultation to review your trust.
Parman & Easterday