Protect your child’s inheritance

Safeguard Your Child’s Inheritance

If you’re planning to leave money to your children or grandchildren, have you thought about ways to protect against situations that could put their inheritance at risk? For example:

What if you remarry? If you pre-decease your new spouse, he or she (or kids from a prior marriage) could end up with your assets. Consider protecting your children by:

  • Having your spouse sign a prenuptial agreement detailing the assets you bring into the marriage and what should happen to the assets when you’re gone
  • Gifting to your children while you’re alive
  • Designating your children or grandchildren as direct beneficiaries of assets not governed by your will, such as an insurance policy, your 401(k) or IRA (which may entail getting a waiver from your spouse)
  • Putting the funds in a trust

What if your child or grandchild gets divorced (or files for bankruptcy or is named in a lawsuit)? Help protect your heirs’ inheritances against creditors by:

  • Educating them about co-mingling an inheritance with marital assets
  • Putting the funds in a trust (with spendthrift provisions)

What if your heir isn’t able to handle money? If you fear your child isn’t ready for the responsibly that comes with managing wealth, you can help by:

  • Providing them with some financial education (invite your adult children and grandchildren to a Luma Wealth event)
  • Talking to your children about how you hope they’ll use their inheritance
  • Setting up a trust that regulates access to the funds, if you fear your child isn’t ready for the responsibility

A trust may help protect your heirs but identifying the right type for your needs can be complicated. Your Luma Wealth advisor is happy to work with you and your attorney to help you safeguard their inheritance.

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