It may be that you think the world of your son or daughter-in-law, but it may still be your wishes that all of your assets are preserved for your children. That is a very reasonable and understandable position to take. To ensure that it goes as planned requires some strategy.
While you can use a prenuptial agreement to protect your assets from your own spouse, you cannot create a prenuptial agreement for your adult child and his or her spouse. You can encourage them to create one and offer suggestions for terms that could be included, but it is ultimately each person’s decision to choose to move forward with that type of contractual obligation.
Instead you can protect your assets from a son-in-law or daughter-in-law through the use of a trust. As the creator of the trust, you fund it with your assets which will be distributed after your death according to terms you create. If properly drafted, any assets held in this trust cannot be accessed by your beneficiaries’ spouses or their creditors. If your adult child gets a divorce, these assets will not be included in the marital property that gets divided during the equitable distribution phase.
Another option is to skip a generation all together. You can leave your assets to your grandchildren as the primary beneficiaries rather than you own children. This may still create an issue with in-laws as your grandchildren may also be married or soon to be married. However, this strategy could be used if there is one particular in-law that you are attempting to disinherit.
The safest strategy is to create a trust which provides numerous benefits:
- Trust assets are for named beneficiaries only.
- Terms can be included that the assets and/or interest generated from the assets can be used only for health, education, maintenance and support.
- A trustee oversees the use of the assets.
- The assets are not considered marital property and therefore will not be accessible to an in-law during a divorce.
- Trust assets are protected from beneficiaries’ creditors.
- The trust can be revocable or irrevocable.
- The language in the trust can be used to dictate a variety of different terms regarding asset distribution, when the trust terminates, and remainderman beneficiaries.
To learn more about asset protection strategies, contact the experienced estate planning attorneys at Stouffer Legal in the Greater Baltimore area. Protecting your legacy and ensuring that your wishes are met is the number one goal of our estate planning process. Each situation is unique and requires a custom-tailored plan. Start the new year off right by getting your estate plan in order. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.
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