Estate planning isn’t just about deciding how your estate assets will be distributed after you are gone. That same plan should also help protect and grow those assets over the course of your lifetime to help ensure that there are sufficient assets left at the end of your life to pass down to loved ones. Some of the threats to your assets are well known; however, some are less obvious. With that in mind, the Phoenix estate planning attorneys at Morris Hall PLLC explain why you need to consider in-laws in your estate plan.
The Importance of Protecting Your Assets
Working hard, saving frugally, and investing wisely are all aimed at growing the value of your assets. Working, saving, and investing, however, won’t accomplish that goal if you don’t also pay close attention to potential threats to the assets you do amass. Most people think to protect against some of the more common threats, such as divorce, business failure, or an economic downturn; however, there are other threats that can be just as devastating to your estate assets if you don’t incorporate sufficient assets protection measures into your estate plan.
How Can Your In-Laws Threaten Your Assets?
One of the biggest potential threats to your hard-earned assets is one that most people don’t even recognize as a threat – your in-laws. The damage your daughter or son-in-law could do to the value of your estate, however, is potentially devastating. The reason is simple. Most parents amass assets with the hope and intention of passing at least some of those assets down to their children eventually. Often, parents start the process of transferring their wealth while they are still alive using lifetime gifting tools and strategies. When done correctly, lifetime gifting can make a significant difference in the amount of federal gift and estate taxes your estate will owe after your death. Whether you make lifetime gifts or wait until after you are gone to pass down assets to your children doesn’t really matter though. What does matter is whether you recognize the risk your child’s spouse poses to those assets.
When you make an outright gift to an adult child, whether as a lifetime gift or a bequest in your Last Will and Testament, the assets gifted become the property of your child… and potentially his/her spouse once the gift is made. Those assets are then subject to division in a later divorce or being squandered by a spendthrift spouse. Imagine how you would feel if you spent a lifetime building up your estate assets just to see them awarded to a son-in-law or daughter-in-law in a divorce, or to find that the same son-in-law or daughter-in-law lost the assets gambling or spent them buying drugs. Sadly, it can and does happen.
Don’t make the mistake either of assuming that because it is an inheritance that the assets are safe in a divorce. If they are kept separate and apart during the course of the marriage they may, indeed, be considered separate property and not be subject to division in a divorce. Often, however, an inheritance is co-mingled, sometimes without even realizing it, and becomes marital property subject to division in a divorce.
If your son or daughter-in-law has a substance abuse, gambling, or mental health problem the inheritance could rapidly disappear without your child’s consent. A court order to return the funds to your child won’t change the fact that they are gone.
Protect Your Assets from ALL Threats
The simple fact is that even if you adore your son or daughter-in-law right now, he/she could pose a serious threat to your assets in the future. The good news is that by working closely with your estate planning attorney you can guard against this threat. One simple asset protection strategy that works when in-laws are a concern is creating an asset protection trust. By distributing your estate assets to your child through a trust, the assets cannot be co-mingled, nor can a son-in-law or daughter-in-law get ahold of them to squander them.
Contact Phoenix Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about protecting your assets from in-laws, contact the experienced Phoenix estate planning attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.
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