How to Protect an Estate from a Rotten Son-in-Law
If you’ve been working for a while, you have an estate. If you’ve been working for a long time, you may even have a sizable estate, and between your home, insurance and growing retirement funds, your estate may reach the million dollar mark. That’s the good news. But the bad news might be an adult child with a drug or drinking problem, or a child who married a person who doesn’t deserve to inherit any part of your estate. Not to mention an ex-spouse or two. What will happen when you aren’t there to protect your estate?
There are steps to protect your estate and your family members, as described in the recent article “Is your son-in-law a jerk? Armor plate your estate” from Federal News Network.
Protect Your Estate from Rotten Son-In-Law, Step 1: Don’t overlook beneficiary designations. Most employer-sponsored retirement and savings accounts have beneficiary designations to identify the people you wish to receive these assets when you die. Here’s an important fact to know: the beneficiary designation overrides any language in your last will and testament. If your beneficiary designation on an account names a child but your will gives your estate to your spouse, your child will receive assets in the account, and your spouse will not receive any proceeds from the account.
Protect Your Estate from Rotten Son-In-Law, Step 1: Don’t try to sell a property for below-market value. The same goes for trying to remove assets from your ownership to qualify for Medicaid to cover long-term care costs. Selling your home to an adult child for $1 will not pass unnoticed. Estate taxes, gift taxes, income taxes and eligibility for government benefits can’t be avoided by this tactic.
Protect Your Estate from Rotten Son-In-Law, Step 2: A common estate planning mistake is to name specific investments in a will. A will becomes part of the public record when it is probated. Providing details in a will is asking for trouble, especially if a nefarious family member is looking for assets. And if the sale or other disposition of the named asset before your death impacts bequests, your estate may be vulnerable to litigation.
Protect Your Estate from Rotten Son-In-Law, Step 3: How will you leave real estate assets to heirs? Real estate assets can be problematic and need special consideration. Are you leaving shares to a vacation home or the family home? If kids or their spouses don’t get along, or one person wants to live in the home while others want to sell it, this could cause years of family fights.
Protect Your Estate from Rotten Son-In-Law, Step 4: Making a bequest to a grandchild instead of to a troubled adult child. Minor children may not legally inherit property, so leaving assets to a grandchild does not avoid giving assets to an adult child. The most likely guardian will be their parent, undoing the attempt to keep assets out of the parent’s control.
Protect Your Estate from Rotten Son-In-Law, Step 5: Include a residuary clause in a will or trust. Residuary clauses are used to dispose of assets not specifically mentioned in a will or trust. Your estate planning attorney will create the residuary clauses most appropriate for your unique situations.
Protect Your Estate from Rotten Son-In-Law, Step 6: Name that son-in-law the beneficiary of a discretionary trust. If the son-in-law (or any other family member for that matter) has an issue with spending (such as a person that has a substance abuse issue), you can leave any legacy to that person in a trust, and specify that the trustee of the trust is allowed to make discretionary distributions for the beneficary.
Protect Your Estate from Rotten Son-In-Law, Step 7: Prepare for the unexpected. Your estate plan can be designed to address the unexpected. If a primary beneficiary like a daughter or son divorces their spouse, a trust could prevent the ex from gaining access to your assets.
An effective estate plan, prepared with an experienced estate planning attorney, can plan for all of the “what ifs” to protect loved ones after you have passed.
To learn more about estate planning for blended familes, read these articles: How Do I Avoid Estate Planning Mistake with a Blended Family? and Blended Families Create Estate Planning Challenges and How Does Medicaid Count Assets? and What Items Should Not Be in a Safe Deposit Box?
Reference: Federal News Network (Sep. 1, 2021) “Is your son-in-law a jerk? Armor plate your estate”
BOOK A CALL with Ted Vicknair today to find out more about how you can plan your future for your and your family’s security.