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Offered by Michael A. Dolan

The storybook marriage was over, Mary had lost her job, and with the extra time at home she discovered her husband’s infidelity. Mary’s father had died seven years ago and left her a substantial inheritance. Not believing that her husband could do such a thing, Mary had simply combined the inheritance with the other family assets. Unfortunately, in the divorce there was no way to determine what the inheritance was, and what was the marital property. Being unable to determine the difference, the judge divided all of the assets between Mary and her unfaithful husband. To add insult to injury, Mary had just lost half of her inheritance.

But the outcome of this case didn’t have to be this way. If Mary’s father had done a thorough estate plan, he would have left the inheritance to Mary in trust. Mary would control the trust, but the trust would help her keep the inherited assets separate from the marital assets. If Mary used the assets inside the trust for her benefit, but did not draw them out of the trust and spend them, she could have easily identified the inherited assets in the divorce. As a result, the inherited assets would have been her separate property and would not have been divided in the divorce.

Estate planning can and should be more than avoiding probate and saving taxes. A properly designed estate plan can provide many additional advantages that protect your family. Most of these protections are ignored in cookie-cutter form-driven estate plans. Individuals should look closely at all of the benefits a properly designed estate plan can provide to them while they are alive, and provide to their families after their death.

After all, when is it okay that your children’s ex-spouses receive the inheritance you worked so hard to accumulate and pass on to your children?

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Dolan & Associates