Q: My husband and I have amassed a nice bit of real estate during our marriage. We have been looking at doing an estate plan, but we aren’t sure how to address an issue we have with our son. Our eldest son is in a rocky marriage and none of us are convinced that the marriage will last, although he and his wife have been together for more than 10 years. My husband absolutely does not want our daughter-in-law to inherit any of our property if their marriage does last and our son dies before she does. Is there anything we can do to ensure that our son receives his inheritance, but upon his death, his remaining share would be redirected to our other children? Our other adult children are in stable, long-term marriages. If this was your family, what would you do?
A: You might be surprised to know that this is a fairly common dilemma for families, and it shouldn’t stop you from moving forward with estate planning. Given your situation, you would be a good candidate for a living trust. In a living trust you can easily stipulate that your son’s inheritance be held in an asset protection trust for his lifetime and upon his death, distributed outright or in trust to your other children. You can name a trusted individual to act as trustee over your son’s trust to ensure that distributions to your son are done prudently and in keeping with your wishes.
You may even want to consider putting ALL of your children’s shares into asset protection trusts. Your son may mend his relationship and one of your other children may have an unexpected divorce, bankruptcy or end up in a legal battle with a creditor due to an accident. Without the trust, your child’s inherited share would be vulnerable to their creditors. Additionally, if any of your children were to become disabled, either mentally or physically, and require government benefits, that child’s inherited share, if required to be held in a special needs trust, would be available to your child without preventing them from receiving their benefits.
If you do make the decision to have your children’s inheritance held in trust for them, you may want to talk with them to explain why their inheritance will be administered in this way and the benefits to them. This extra step of transparency can help alleviate possible friction that may arise if your children are under the impression that they will inherit their share outright.
If you have questions about type of estate plan, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.
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