Two talks to have in the family
Most estate planning columnists write articles commonly known as the “talk.”
They are usually writing about the need for good communication between seniors and their adult children. The talk can include topics including when the senior should discontinue driving his car, when the senior should consider moving to residential care, and a number of other difficult topics to discuss.
But there is another kind of talk to be had in families. That is the talk by the parents to the adult child about how the adult child should protect any inheritance the adult child receives from divorce or creditor claims. If the adult child receives an inheritance and co-mingles it with his or her spouse, then the inheritance is usually split 50/50 if there is a subsequent divorce. Usually, neither the parent nor the adult child ever meant that to happen. They simply did not understand the rules.
This is where the senior has the talk with the adult child that his or her inheritance should not be co-mingled with the spouse, unless the marriage is very solid and mature. What does co-mingling mean? It means depositing any inheritance into an account titled in the name of the adult child and their spouse. Another example would be the adult child purchasing a new home with the proceeds of the inheritance and titling in joint tenancy with his or her spouse. In either of those situations, that results in the daughter-in-law or son-in-law being entitled to one-half of the amount so co-mingled.
Finally, if you wish to really keep your in-laws out of your estate, you can have your estate pass in trust for your adult children in a manner that they have generous access but it cannot be co-mingled. Wesley Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas, and can be reached at 501-525-4401 or by email at wesley@farrarwilliams.com. Wesley can answer any questions you have about this subject.