Protecting Your Assets When You Are Gone

 Posted on January 07,2015 in Estate Planning

For many, working hard and saving for the future is essential. And by the time retirement is reached and a sizable nest egg has been built up, a sense of confidence is formed that upon passing, one's adult children and their families will be well cared for. But, what happens to that sizable inheritance if an inheriting adult child and his or her spouse divorce? How much of those funds can an ex-spouse walk away with? Or, what if the one receiving the inheritance is known to be financially irresponsible?

When Your Adult Child Divorces

In most situations, when an adult child receives inherited funds and then combines them with those of his or her spouse—such as purchasing a home—the funds become part of the marital estate. Therefore, should the couple split, the other spouse would be entitled to half of the worth.

Additional Concerns of Financial Irresponsibility

Parents may also take concern when an adult child has a history of making poor financial decisions and lacks money management skills. In this type of situation, a parent may be concerned that once an adult child inherits a substantial amount of money, he or she will squander it away. In addition, an adult child may have creditors that will put a lien or attachment on the funds.

How to Protect Your Assets

One way to ensure that these situations do not happen is to set up a trust that has specific stipulations on how the funds are to be dispersed. A parent can also implement a "spendthrift clause" which prohibits creditors from accessing or attaching the funds in the trust. This clause protects the funds in a trust not only from current creditors the adult child has, but also from future creditors

If you are concerned with the future of your estate and what may happen to any inherited funds, please contact an experienced Wheaton estate planning attorney to discuss your options. We represent clients throughout northern Illinois in DuPage County, Cook County, Kane County, and Lake County. Call us today at 630-665-2500.