How can I protect my estate from becoming considered marital property of my beneficiary?

My son will be the beneficiary of my will or trust and I want to ensure that my property will stay under the ownership of my family. Can I structure a will or trust so that my estate will not be considered marital property if my son gets divorced? 

Marriage / Divorce, Estate Planning, Tangible Assets
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August 2017
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Generally, inheritances are not subject to equitable distribution because, by law, inheritances are not considered marital property. Instead, inheritances are treated as separate property belonging to the person who received the inheritance, and therefore, may not be divided between the parties in a divorce. If you pass on an inheritance to your son and it is cash and he receives the funds and deposit's it into an account held in joint names with his spouse, he will have commingled the inheritance. In community property states where courts divide all marital property 50/50 in a divorce, your sons spouse is now entitled to half of his inheritance.

Laws protect inheritances in all states. This means that if your son receives an inheritance, the law declares that his spouse has no right to it during or after his marriage providing he always keeps the money sole and seperate. However, it is very easy to undo this protection if he does not handle the inheritance properly. Your sons inheritance is his sole and separate property as long as he takes steps to segregate it from his other marital assets. When and if he commingles his inheritance with his marital assets, he will cease to shelter it. Commingling means you’ve put it together with marital money or property. In equitable distribution states, where judges have the right to distribute property in a way they think is fair, your spouse will now receive a portion of his inheritance. Exactly how much would depend on how much a judge feels it is fair to give your sons spouse.

The only time an inheritance must be shared is when a divorce court decides that it was not kept separate from marital property. A spouse who does not wish to share their inheritance may keep it separate by depositing the proceeds into a separate bank or investment account. The accounts should be set up as sole and seperate property and titled that way.  If your son then buys property (stocks, real-estate) with the proceeds of his inheritance. He would title that property in the same sole and seperate property name.  Your son must deal with all the cash and property  (stocks, real-estate)  he inherits in the same manor and retitle the property in his name as sole and seperate property.

Your son also needs to make sure that he does not pay any of his joint bills with any of the funds from the sole and seperate property accounts.  If he does, that may be deemed commingling and would then put a cloud over the whole sole and seperate accounts intentions.  I would recommend consulting your accountant and estate planning attorney for advice as well.

 

 

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