WE SAW this headline in a lawyer’s advertisement for a seminar:
PROTECT YOUR ESTATE FROM YOUR CHILDREN’S PARTNERS
The seminar was about family trusts, and we’ve done articles about them before, but it’s an important issue. Briefly, protection works like this:
When you die, you don’t need to leave your wealth directly to your spouse or children. You may leave it in a trust set up for their benefit.
What if that dear charming marriage partner your off-spring has chosen, turns out to be a louse? He/she will usually get half of what you left to that child. If you’ve put everything in a trust, it’s not your child’s asset, so the partner will have difficulty making a claim on it.
Also, if your youngster does own the asset, look at the embarrassment for them of having to tell a potential partner: “I’m worth a little fortune. I love you and trust you but, just in case, I want a pre-nuptial agreement, which means I don’t really trust you.”
How much nicer to smile and say: “Yes I do,” and if the relationship turns to custard, no worries. The trust owns everything and the separating partner gets none of your estate.
You don’t have to wait until you are dead. Commonly people move their assets into a trust years before they pass on.
You should, of course, explain to your children that when you’re gone, it would be a good idea to keep the trust going. Instead of taking money out to buy a house, they should borrow it from the trust so the trustees can demand repayment if the relationship falls through.