When it comes to estate planning in Nevada, those who have prepared a will may also wish to consider a trust, but not for the tax reasons that many may think. Instead, an increasing number of individuals are building trusts into their wills for the purpose of asset protection, not for themselves, but rather for their children. Without the protection a trust provides, in the case that the adult child’s marriage fails, a divorce settlement could potentially mean thousands, if not millions, of dollars of lost inheritance money.
For instance, if an adult child combines his or her inheritance with whatever assets he or she jointly owns with a spouse, such as a marital home or shared bank account, the inheritance generally becomes marital property. This, then, leaves it subject to property division should the individual divorce at any later point in time. However, if the inherited wealth remains in a trust account, the inheritance may be protected in the event of divorce, leaving the adult child with his or her own assets to fall back on.
When deciding on whether or not a trust is necessary, some aspects to consider may include the age of the child or the length of the marriage. If, for example, the child is under 18, chances are good that marriage – and a possible subsequent divorce – are not even considerations. A trust might still be a good idea, however, as a trustee can help oversee the assets and guide the minor child in making wise financial decisions. If the beneficiary is an adult but is newly married, a trust may also prove wise. Most marriages are happy for the first few years, but time and the stresses of life can take their toll on a couple’s happiness.
Trusts can be reviewed every five years or so, at which point such issues can always be re-evaluated. Constant changes and updates are not necessary, but periodic appraisal can mean an opportunity for evaluation and modifications as circumstances change. Trusts offer a great method for asset protection and for providing for children and loved ones, and an experienced Nevada estate planning attorney will be able to explain the various options available for any given situation.
Source: kiplinger.com, “A Trust Can Protect Your Adult Child’s Assets from a Failed Marriage“, Lisa Brown, March 6, 2017