We have seen plenty of times that not every family dynamic is drama-free. Sometimes, siblings cannot get along, and parents crafting their estate planning strategy often worry about what will happen when they are no longer here to keep the peace. Will they properly manage their inheritance? Will our wishes divide them even further? In other instances, the children are not the problem at all — it is their spouses who cause a bunch of grief.
So when we were recently asked the following question, we were not too surprised.
My son is married, and I do not trust his spouse. How can he keep his inheritance out of her grasp — just in case they get a divorce?
There is some good news and bad news here, so let us start with the good news.
Under Texas law, inheritances are the separate property of your child. If you leave them $50,000, it belongs to them. If you leave them dad’s corvette, your priceless China plates, jewelry, etc., they are 100% his. It is not community property — even though Texas is a community property state.
So the good news is that his spouse has no rights in or to that inheritance.
But here is the other side of the coin.
What your child does after receiving the inheritance can change what was once his separate property into community property. For example, let us say you leave him $500,000 upon your death. If he takes that money and places it into a joint bank account, then he could run into problems as it might not be considered separate property anymore.
What is the best course of action, then?
The best approach is to make sure he does not commingle these newly-received assets with the joint assets belonging to him and his spouse. Furthermore, certain types of Living Trusts — such as a Heritage Trust — can help greatly in preserving these inherited assets as separate property.
With these trusts, you can limit the distribution of money so that it can only be passed down to your family.
Call Leigh Hilton PLLC today!!
Call Leigh Hilton PLLC in Denton, TX, and we will help walk you through all of your estate planning needs. We have ample experience and will take into consideration your particular situation. Proper planning of an estate, whether through a will, trust, or both, helps ensure your wishes are carried out.
Leigh Hilton PLLC wants to be your first call every time for any estate planning need. We look forward to serving you.