Presented by: Bradford & Holliman, Estate Planning
You Can Protect Your Adult Children in Your Estate Plan
Over the last decade, I have seen a steady increase in the number of clients that ask me if they can protect the assets they want to give as an inheritance to their children from their children’s creditors. The conversations often sound like this:
- Example 1: “I want to leave fifty percent to my son; but, he may likely get a divorce. I want him to have the money, I do not want his ex to get any of what I have worked for over my lifetime.” [Although, at the time, divorce is not on the horizon, the parents will often continue with a recital of all the reasons why they think divorce is likely to occur.]
- Example 2: “I want to leave everything to my daughter; but, she has a lot of creditors. If the creditors do not seize all the assets, she will spend anything that remains within six months. I want to provide for her; but, I do not want to sustain her spending habit.”
Although heartbreaking, children getting divorced is very common in our modern society; and, it is easy to understand why parents wish to give their children an inheritance while not funding an ex-spouse’s support and lifestyle. The parents reasonably say that the assets are theirs and they want to control who gets to enjoy the assets.
Likewise, parents do not like to think that their assets will immediately be spent on enormous debt or judgment collection issues that a child may have. Again, the parents wish to give assets to the child without giving to others, such as creditors.
Can parents control this situation? Yes, if they have proper estate planning. The parents have great flexibility in setting restrictions and limits on how the assets can be used for a child. Using a trust with the proper criteria, parents can set the limits that control how the assets can be used for a child. While this article is too brief to explain how the trust can do this, parents with this concern should understand that they can take action to protect their assets and their children. Discuss your worries and goals with your estate planning attorney and develop a plan that works for you.
-Melanie B. Bradford
Partner, Bradford & Holliman, LLC
Practice focuses on estate planning, elder law and special needs trust.
2491 Pelham Parkway, Pelham, AL 35124
This article is for educational purposes and is not intended for specific legal advice.