What Steps Can I Take to Protect Assets for Family?

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KS and MO Attorney Kyle E Krull

Written by Kyle Krull

Attorney & Counsellor at Law Kyle Krull is president of the Law Offices of Kyle E. Krull, P.A., an Estate Planning Law Firm located in Overland Park, KS. Estate Planning Attorney Kyle Krull has provided continuing education instruction to attorneys, accountants, and financial professionals at local, state, and national programs.

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POSTED ON: September 27, 2021

It may be necessary to protect inheritances from in-laws and addictions. It is not uncommon for adult children to make poor decisions. Sometimes this means they will choose undesirable spouses. For others, it may involve the development of a substance or behavior addiction. Whatever the issue, an outright inheritance may be unwise. After all, you […]

It may be necessary to protect inheritances from in-laws and addictions.

It is not uncommon for adult children to make poor decisions.

Sometimes this means they will choose undesirable spouses.

For others, it may involve the development of a substance or behavior addiction.

Whatever the issue, an outright inheritance may be unwise.

After all, you want the inheritance to be a blessing and not a curse, yes?

According to a recent Federal News Network article titled “Is your son-in-law a jerk? Armor plate your estate,” certain estate planning decisions can place your assets at risk.

You can protect inheritances from the problems of your adult children.

You made need to protect an inheritance from problematic spouses of behaviors.

The good news is it is possible to protect everyone you love and everything you have.

How does one do this?

Pay attention to beneficiary designations.

If you have an 401(k) or an IRA, you likely have filled out paperwork designating an heir to directly receive these assets when you die.

Doing so allow will enable these funds to pass directly to an heir while bypassing probate.

While this simplifies the distribution of these assets, it can become problematic for those who only update their last will and testament or revocable living trust.

Why?

Neither the provisions of a last will and testament nor of a revocable living trust can control such beneficiary designations.

If your adult child enters a bad marriage or develops an addiction, you will want to update these beneficiary designations specifically to protect these assets.

Do not sell a property for below-market value.

This can often happen when someone is attempting to qualify for Medicaid.

The government will notice if you attempt to sell your property to family for a pittance.

As a result, you could trigger gift taxes, estate taxes, and income taxes.

You may even leave yourself unable to qualify for government benefits.

Yikes!

In addition, this can cause conflict among jealous family members who believe you are showing favoritism.

As a result, you could open your estate to litigation when you die.

Avoid naming specific investments in a will.

To protect your assets, you should not detail them in your last will and testament.

Why?

Your last will and testament must be filed with the probate court.

This means the information become public knowledge.

By doing so, the untrustworthy spouse of your child or your child with addictions may choose to contest your last will and testament.

Plan how you will pass real estate assets to heirs.

For many, real estate is a significant asset and is not easily divided.

If it is a vacation home, you could trigger family fights for years if your children and their spouses do not get along.

The best way to protect your home or vacation property is to not assume everyone will agree.

Carefully plan bequests to grandchildren.

If you are attempting to protect an inheritance for your grandchildren and from your troubled adult child, you should not pass the assets "outright" to grandchildren through a last will and testament or revocable living trust.

A minor child cannot legally inherit.

Consequently, the assets are used and held by a guardian on behalf of the child.

Often this guardian is the parent of the minor child.

An inheritance trust would provide you with greater control in preserving the inheritance for your grandchild than would an outright distribution.

Include a residuary clause in a will or trust.

What is a residuary clause?

If you do not mention assets specifically in your last will and testament or revocable living trust, this clause allows you to dispose of all remaining assets according to your wishes.

Prepare for the unexpected.

You cannot accurately predict the future.

Your children may divorce their spouses or have addictions, let alone experience lawsuits and even bankruptcies.

It is best to take precautions in your estate planning in advance.

As the Boy Scouts put it - Be Prepared!

ReferenceFederal News Network (Sep. 1, 2021) “Is your son-in-law a jerk? Armor plate your estate”

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