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Protecting Your Legacy
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Safeguarding hiers' assets for the future

People who have retired to Florida often have to make significant estate planning decisions. Those who have capital tied up in assets such as a home, IRA or business investments may feel overwhelmed when attempting to divide the estate equally among their heirs. These decisions may seem even more complicated when an heir is involved in a problematic marriage that may potentially end in divorce. Parents may also consider how well their children manage their own finances.

Some assets obtained during marriage may be protected from equitable distribution in the event of a divorce. As long as the asset has not been commingled, it may remain in possession of the party named as owner. As long as heirs keep the asset in their name and don't add capital contributed from a spouse, the asset may remain immune during property division negotiations in a divorce proceeding. If the inherited asset is used to purchase property with the spouse, the inheritance may be subject to equitable distribution in some states.

Lawyers may advise heirs to keep the inheritance in a separate brokerage or bank account to help safeguard the assets from being commingled with a spouse's funds. People who are interested in protecting the value of the inheritance for children may consider putting the assets in a trust. This can be an effective means towards protecting an inheritance against the claims of a divorced spouse.

Estate owners can include a spendthrift clause in the will that prevents heirs from using any interest in the trust as collateral. Effective estate planning may help protect an heir's inheritance from both divorcing spouses and creditors. Lawyers may also be able to help clients work alongside financial professionals to help minimize any tax liability while safeguarding beneficiaries' inheritances for the future.

Source: NJ.com, "Your Money: Protecting adult child's inheritance from ugly divorce fight and poor money decisions", Karin Price Mueller, May 12, 2014

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