Myth: my son is separated from his wife. When I die his inheritance could be given to his ex wife.
This is actually true.
If you are a widow/widower, you have children and you have no Will, then the law states that your estate is given to your children. When you pass away and your child is undergoing a lengthy property settlement, their inheritance forms part of the matrimonial assets, meaning that their inheritance could be given to their ex.
If you are a widow/widower, and you have a Will which gives your estate to your children, then their inheritance also forms part of the matrimonial assets, meaning that their inheritance could be given to their ex.
Is this what you want?
Mythbuster: Testamentary Trusts
There is a strategy that can help ensure that your child keeps their inheritance. It is called a “Testamentary Trust”, a trust set up in a Will. When you pass away, any assets that your child inherits will be placed into this testamentary trust.
Your child and your child’s family members can potentially benefit from the assets in the trust and their entitlements are at the complete discretion of the trustee. Because the beneficiaries do not own the trust assets – the assets are protected. Your child can still benefit from the assets.
We consider these Testamentary Trusts much like the Queen’s Guards who protect the Royal Family’s properties.
Or Bernadette calls it as “bubble wrapping” your child’s inheritance and protecting it against claims from predators and creditors.
So, these trusts are also effective if your child is:
– in a high risk profession (hello doctors, lawyers, accountants, directors) and can be sued;
– bankrupt;
– a spendthrift;
– an addict (alcohol, drugs, gambling); or
– unable to manage their inheritance.
What this means is that if any of these unfortunate events occur (ie your child becomes bankrupt), their inheritance is protected.
Asset protection is just one advantage of these trusts. We’ll cover other features on Thursday.
Is this something you’d be interested in? Or if you are a child – don’t you want your inheritance to be protected?
Talk to your lawyer about these trusts or we can help you – we’ve set up many in our 20-year history and not one of our trusts has been challenged – ie our client’s children have kept their inheritances.
