Comprehensive Planning. Lifelong Solutions.

Protecting an Inheritance from Divorce

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By Sarah Schmidt

One of the most common questions estate planning attorneys receive is the proverbial, “Should I have a will or a trust?” Although the answer to that question must be given in light of each client’s individual circumstances, one primary consideration in creating an inter vivos trust is the protection that it can afford beneficiaries upon death. One of those protections, for example, is the protection from future creditors or divorce.

This planning tool was recently highlighted in an unpublished opinion by the Court of Appeals of Virginia.  In Montgomery v. Montgomery, wife in the divorce proceeding was a beneficiary of her parents’ trust and the survivor of her parents had recently passed away. Notably, the trust, at the death of both of the parents, provided that the assets should be distributed outright per stirpes to both kids, but the court found that it could not be attributed to wife in awarding spousal support because the trust granted the trustees the discretion to retain investments “for as long as the Trustee may deem appropriate, whether or not such assets satisfy the prudent investor standard, produce income or represent an over concentration in one investment.” The court found that because the distributions had not yet been made and the wife, who was only a co-trustee of her parents’ trust, had no authority to direct or require the distribution, the future beneficial interest was insufficient so as to be imputed to the wife as income in the divorce proceeding. The wife had not yet “inherited” the property and  “the circuit court lacked the authority to reach into the trust to force wife and [the co-trustee]—who is not a party to th[e] divorce litigation—to dispose of trust property or to impute income to wife based upon undistributed trust assets.” You can view the opinion at this link.

In considering using a trust as an estate planning tool, clients should consider the likelihood that a beneficiary—even a remote or contingent beneficiary—will get divorced. The statistics and data collected showing the rate and number of marriages that end divorce are remarkable.

While the trials and tribulations that a beneficiary may have to endure in life are, of course, most often unforeseen and unpredictable, proper estate planning can truly not only protect an inheritance for a beneficiary so as to sustain them in times hardship, but also to sustain an inheritance to benefit future generations.

Kit KatAsk Kit Kat – Elephants & Bees

Hook Law Center:  Kit Kat, what can you tell us about elephants and their fear of bees?

Kit Kat:  Well, this is extremely interesting! It has long been known that the mighty elephant is very fearful of the tiny bee. One-on-one, the bee is not a threat to the elephant, but in swarms, they can be extremely annoying, especially if they get in the elephants’ trunk, mouth, or eyes. So with this knowledge, scientists have decided to turn this fear to the elephant’s advantage.

Elephants are at risk from farmers when they wander into fields and feast on certain crops. So instead of using electrified fences to keep the elephants out, scientists are conducting experiments in which beehives, alternated with fake hives, are strung every 20 meters around a farm’s perimeter. The success rate of keeping the elephants away is around 80%. There’s an added bonus in that the fences with beehives are significantly less expensive than electrified fences. Save the Elephants, a non-profit conservation group, estimates that the beehive-loaded fences cost 1/5 the cost of an electrified one. It’s also been discovered that a totally fake beehive fence doesn’t work. The elephants can detect that. There have to be some live bees buzzing to remind them of the danger. It turns out that elephants are quite intelligent!

The above discussion primarily refers to African elephants. Asian elephants behave a little differently. Scientists are not sure if that’s because the bees in Asia tend to be less aggressive. However, the fences are being tried on both continents. Dr. Lucy King of Oxford University in Great Britain, who is working on this project comments, ‘When I first started, I had to really persuade people to try it. They thought I was absolutely insane. Then they thought, well, she’s giving us free beehives, so whatever. Now people are queuing up to do it.’ If scaring away the elephants doesn’t work perfectly, they can at least make some money on the side with the sale of honey! It’s a win-win for everyone! (Karen Weintraub, “Elephants Are Very Scared of Bees. That Could Save Their Lives.” The New York Times (Science section), Jan.26, 2018)

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Posted on Monday, February 19th, 2018. Filed under Newsletter.
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