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Blog: How to Ensure Your Child’s Inheritance Remains as Separate Property

Oftentimes parents would like to provide for their children after they pass but also want to ensure that their legacy benefits their child only, and not their child’s spouse. The good news is that in Florida, assets acquired during a marriage which are a non-interspousal gift (a gift not intended for the couple, but just one spouse), a bequest in a last will and testament or trust, or as a beneficiary to a financial asset, are seen by Florida courts as non-marital assets!

NewsAugust 03, 2021 — by Cassandra Jelincic

By Cassandra Jelincic, Associate Attorney, Elder Law

Oftentimes parents would like to provide for their children after they pass but also want to ensure that their legacy benefits their child only, and not their child’s spouse. The good news is that in Florida, assets acquired during a marriage which are a non-interspousal gift (a gift not intended for the couple, but just one spouse), a bequest in a last will and testament or trust, or as a beneficiary to a financial asset, are seen by Florida courts as non-marital assets!

As long as your child keeps the inheritance in a separate account, with just his or her name on it, and does not add his or her spouse as a co-owner, or use the funds to buy an asset in both of their names, the assets will remain your child’s sole property.

However, sometimes there is commingling of the assets, which may make the property lose its non-martial-assets designation. Commingling is when someone joins a separate non-marital asset with marital assets. This can occur if: (1) your child places his or her inheritance in a joint bank account or in an account in which all expenses of the relationship are paid from, (2) uses his or her inheritance to fix or upgrade a joint asset, or (3) uses the funds to purchase an asset in both spouses’ names. However, this only becomes an issue should your child and his or her spouse become divorced. Otherwise, arguably your child is still benefiting from his or her inheritance.

Should your child’s marriage result in divorce, and there is no evidence of commingling of the assets, then the inherited property will stay as separate property unless the spouse can demonstrate to the court that your child intended the inheritance to be a gift to the marriage. This would occur by showing your child’s (1) donative intent, (2) delivery or possession of the gift to his or her spouse, and (3) surrender of dominion and control of the gift to his or her spouse.

Unfortunately, should your child receive an outright inheritance, you cannot control how your child spends the inheritance or who he or she chooses to leave it to should something happen to your child. As there is little that can be done to prevent your child from spending an inheritance as he or she wishes, you may not want to give your child an inheritance outright.

As a parent, you may want to limit the risk of the above from happening or just control what your child’s inheritance may be used for. If that is the case, there are estate planning documents that can allow you to control the disbursement of funds to your child even after you have passed. That estate planning document is called a trust.

By creating a trust, you can control when your child gets a distribution, how much he or she gets, and for what the distribution can be used. That way, only so much at a time can be subject to the risk of being commingled with your child’s spouse. This works by appointing a trustee and dictating the terms of when or how your trustee should provide your child with a portion of the inheritance.

Any and all money that is in the trust will only be subject to your child’s request for distributions, with the trustee’s approval. The added benefit is that anything in the trust will belong to the trust and not your child, so there is no risk of your child’s spouse inheriting that property.

If you have any questions about setting up a trust for your child or would like to schedule a consultation, please contact us or call (561) 750-3850.

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