» Inheritance
How to Protect Your Child’s Inheritance From Their Spouse
We all hope that when our children marry, their spouses will become a part of the family forever. Of course, experience tells us that that is not always the case. Sometimes there is friction between a person’s parents and their new spouse. Sometimes even marriages that seemed promising don’t work out. Many parents, especially those with significant wealth, want to ensure that their child’s inheritance is protected from their spouse.
If you’ve ever thought to yourself about a son- or daughter-in-law, “They’ll get my money over my dead body,” you might actually be right. Let’s talk about child inheritance protection, whether or not your child divorces their spouse.
How Can Your Child’s Spouse Get Their Inheritance?
There are three ways that your child’s spouse might get their hands on your child’s inheritance: during their marriage, in a divorce, or in the unfortunate event of your child’s death. Before talking about how to avoid those outcomes, let’s examine how they might come about.
In Ohio, inherited assets are generally considered the property of the person who inherited them, not of the spouse. That’s the good news:… Read More
Can You Decide Not to Accept an Inheritance?
It might seem like an unlikely scenario: someone learns that they are entitled to an inheritance, and they decide not to accept it. Can you not accept an inheritance if you are named in a will or you are an heir under the law? The answer is yes, and the process is referred to in legal terms as “disclaiming an inheritance.”
While it may not be a terribly common occurrence, disclaiming an inheritance happens more often than you might think. And if you someday find yourself in a situation where you decide to not accept an inheritance, you need to understand the legal and tax implications of your decision.
Why Would Someone Not Accept an Inheritance?
Most people, of course, are grateful to receive an inheritance from the estate of a loved one. The decision to not accept an inheritance is rarely due to a rejection of the person who has died. There are many reasons to disclaim an inheritance that make perfect sense once you think about them:
To Avoid Estate, Gift, or Income Tax Consequences
Managing tax consequences is probably the most common reason to not accept an inheritance. An inheritance, particularly a large one, can have negative… Read More
Can a Prenup Prevent Inheriting From Your Spouse?
Many, if not most people intend their spouse to be the primary beneficiary of their estate. But there are also many situations in which it makes sense to limit a spouse’s inheritance. Maybe you have family wealth or an interest in a family business that you want to remain in your family of origin if you should die. Perhaps you and your spouse are marrying later in life, and have each accumulated significant assets on your own. You might have children from a previous marriage that you would prefer to inherit your assets; a prenup can protect your child’s inheritance in the event that you predecease your spouse. Whatever your motivation, a prenuptial agreement can be a valuable estate planning tool.
If your first thought when you hear the word “prenup” is divorce, you’re not alone. But a prenuptial agreement is nothing more than agreement between a couple before their marriage as to how they will approach issues (usually financial) during their marriage. While a prenup does deal with how the couple’s property will be treated in a divorce, it can also address what… Read More
How to Prove You Are Next of Kin
Most people have heard the term “next of kin,” usually in connection with a deceased person. Who is “next of kin,” and why does it matter? In the probate setting, it is important to identify someone’s legal next of kin when they have died without a will and their estate must be managed and assets distributed.
Next of Kin Rights and Responsibilities
If a deceased person (decedent) has died with a will, it almost certainly identifies a person whom the decedent selected to administer the probate estate. This person is often a close relative, but need not be. The executor named in the will has no legal authority to act on behalf of the estate until they are appointed by the court.
If there is no will, however, the decedent’s next of kin has priority to be appointed as administrator of the estate. The administrator has numerous responsibilities, including identifying all interested parties and notifying them of the probate proceedings; securing the property of the estate; and paying all legitimate debts of the estate before… Read More
What to Do When a Beneficiary is Living “Off the Grid”
These days, it seems you can find people, even those you haven’t seen in years, in a matter of moments. A quick internet search can find that long-lost friend or second cousin, yielding social media accounts, emails, phone numbers and even physical addresses. It may feel as if it is impossible to escape the sticky tendrils of the aptly-named “world-wide web.” Even in death, digitized Social Security death records, ancestry sites, and websites like findagrave.com mark a person’s existence and passing.
Most people, when creating or updating a trust, don’t anticipate the possibility that one of their beneficiaries will simply disappear without a trace. Yet this very outcome happens with disturbing frequency. Online trails may go cold, and there may be no conclusive evidence that a beneficiary has died. What happens to a trust when a beneficiary is living off the grid, or perhaps not living at all?
How Does a Beneficiary Disappear?
It may seem impossible that someone who is the beneficiary of a trust would walk away from thousands or hundreds of thousands of dollars,… Read More
Inheritance and Divorce: How the Dissolution of Your Marriage Impacts Your Estate Plan
Families are constantly changing—sometimes through joyful events like marriages, births, and adoptions, and sometimes less happy ones, like a death or dissolution of a marriage. But too often, people plan for the future as if it will only contain happy events. Even when people do make an estate plan, they tend to ignore the very real possibility of a divorce down the road: either theirs, or their child’s.
Of course, unlike death, divorce isn’t inevitable. Even so, failing to take into account that a divorce could happen could have disastrous outcomes for family wealth. Our firm talks about inheritance and divorce in Ohio, and what you can do to protect your assets for the people you want to inherit them.
What Happens to an Inheritance in a Divorce?
As you know, in a divorce, the court divides up the couple’s marital property between them. But unless you have actually gotten divorced, you may not have thought much about what “marital property” is. In essence, “marital property” is any property that either spouse acquires during the marriage, with limited exceptions. In Ohio, one of th… Read More
The SECURE Act (And What It Means For You)
In December 2019, the president signed into law the Setting Every Community Up for Retirement Enhancement Act, better known as the SECURE Act. As the name suggests, the law is intended to make it easier for American workers to save for their retirement. Let’s examine what the SECURE Act does, and how it might affect your retirement and estate planning.
End of the “Stretch” Provision
Prior to the SECURE Act, beneficiaries of inherited IRAs and 401(k)s could “stretch” distributions out over their life expectancy. This had a couple of distinct advantages. Because required minimum distributions (RMDs) were stretched out over a longer time period, perhaps decades, that additional income to the beneficiary was less likely to bump them into a higher tax bracket. In addition, of course, beneficiaries could count on a consistent payment amount year after year.
The SECURE Act has done away with the stretch provision, at least for many people. Under the SECURE Act, if the owner of a 401(k) or IRA dies after January 1, 2020, the beneficia… Read More
How Does Inheritance Work When There is No Will?
Ohio, like other states, has laws that dictate how a the estate of a deceased person (decedent) passes when there is no will. These laws, called “laws of intestate succession,” guide courts, and administrators, as to how the decedent’s assets should be distributed. How does Ohio inheritance work when there is no will?
For the most part, laws of intestate succession try to approximate what most people would intend if they had made a will. If there is a spouse and children, for instance, they will inherit rather than a half-sibling or a first cousin once removed. (If you would prefer your first cousin once removed inherit from you instead of your spouse, you had better get yourself an estate plan—or a divorce lawyer.)
Things get considerably more complicated, though, when there are no close relatives, or when heirs are not of the same degree of relation to the deceased. It’s easy to figure out what to do when the deceased is survived by three adult children, but no spouse: the estate is divided into three equal shares. But what if one of those adult children has died, leaving three children of his own? Or what if the deceased had no surviving spouse, childr… Read More
Abatement of Legacies: What Does it Mean?
Most of the time, when someone leaves a will, their assets are distributed according to the terms of the will, after all of the debts of the estate are settled. Occasionally, though, a last will and testament will make bequests that just cannot be fulfilled; there are not enough assets left in the estate. When that happens, who gets shortchanged? Do some heirs receive their entire bequest, while others get little or none of what was "left" to them? Abatement of legacies is the law of who gets what, and how any shortfalls are handled.
Why would abatement of legacies be necessary? Who would leave their heirs assets that they didn't have? Most people don't intend to do that, of course. But the reality is that the value of an estate can go up and down between the time a will is written and the time it becomes necessary to distribute assets. In addition, estate debts can be higher than anticipated, particularly if the last illness of the deceased person incurred significant medical bills.
Put simply, there are often the same number of people at the table, but the size of the pie is smaller. The question then becomes: how is the pie divided? Do some people leave the tabl… Read More
What You Should Know if You Inherit a Retirement Account
If you inherit a retirement account, particularly a traditional IRA or a Roth IRA, you have some decisions to make. Unlike some inherited property, which you can just set aside until you are ready to deal with it, retirement accounts require timely action on your part, while you may still be dealing with the grief of the loss of the person whose account you inherited.
Fortunately, you don't need to take that action on your own. An estate planning and probate attorney can give you the advice you need in order to make those decisions, and the guidance you require to carry them out. In the meantime, here are some general basics to help you understand your options.
Options for an Inherited IRA if You Are a Spouse
What you can (or must) do with your inherited retirement account depends primarily on three factors: whether the IRA is traditional or Roth; whether or not you were the spouse of the owner, and whether or not the owner had reached the age of 70 1/2 w… Read More