2nd marriage and Inheritance
If the client is in a second marriage and just inherited 1 million dollars form her mother which she wants to go to her 2 sons upon her death, would you suggest that she put the inheritance in a revocable living trust now so that t does not become property to equitable distribution or recommend funding a spendthrift trust now for her sons?
The best answer would have been to have the benefactor create an irrevocable trust to hold the inheritance. Unfortunatley, its too late for that. There are a number of steps which could be taken to assure that the assets will be transferred to her sons on her death:
- Have her husband sign a post nuptial agreement acknowledging that the assets involved are separate inherited property and that he acknowledges and agrees that they will be transferred to her sons on her death.
- Place the assets in a revocable living trust to avoid commingling and name a family member from her family, and not her husband, as a co-trustee (or a bank) to aovid claims by the husband that he actively managed the assets. No assets other than immune, non-marital, inherited or gift assets should be included in this trust.
- Provide in the living trust that on her death the assets shall be transferred to her children (and consider lifetime trusts so the children don't have to face the issue she is now facing).
- In her will state that any of the inherited assets should be bequethed to her children and coordinate this with the tax allocation clause, by pass trust and other aspects of her plan. If all the inherited assets are in the revocable living trust there is really no need for this, but the will serves to confirm her intent and the separate nature of hte property.
- Establish a gift program now to begin transfering some of these inherited assets to the sons to demonstrate and confirm her intent (and perhaps to save future gift and estate taxes).
There are a range of issues and complexities. You had best consult with a matrimonial attorney in your state as well as an estate planner. Rules differ significantly from state to state.