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Can I Protect a Loved One’s Inheritance From Their Spouse?

A recent nj.com article asks, “How do I protect my niece’s inheritance from her husband?” The article says that in a scenario where someone plans to leave most of her estate to her niece but doesn’t want her estranged husband to get his hands on the money, she must be proactive to make sure the inheritance is protected.

justice scales

One option is for the aunt to leave the assets to the niece outright or in trust.

The laws in many states say that unless the parties otherwise agree, upon divorce there will be equitable distribution of their marital property. Marital property generally doesn’t include the property received by gift or inheritance, as long as that person didn’t co-mingle it with the marital property.

Therefore, the most economical way to transfer property to the niece, is to leave it to her in the testator’s will, with instructions for her to keep it separate and apart from her marital property.

An outright bequest may not be the best way to leave property to the niece, even though it’s probably the most economical method for the aunt.

However, if the aunt leaves the inheritance in trust, she’ll make certain the property is protected and isn’t commingled with marital assets.

Further, if the trust is properly prepared by one of our experienced estate planning attorneys, the income from the trust will likely not be used to decrease any support to which the niece may otherwise be entitled from her spouse, in the event that they divorce down the road. The trust can also protect against other events, by instructing to whom funds should be paid upon the premature death of the niece. That would further prevent her estranged husband from ever being able to make a claim against the funds.

To learn more about how trusts can be used to protect your loved ones inheritance, submit our online form to request a free consultation with one of our Madison or Rockford estate planning attorneys.

Referencenj.com (August 21, 2019) “How do I protect my niece’s inheritance from her husband?”
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