Inherited money and divorce

[Anonymous]

Your parents need to be speaking to a lawyer and/or a financial planner. The way they want to set this up sounds like a recipe for disaster, tbh.

[Anonymous]

Anonymous wrote:Only on DCUM would someone say that $150k is a small amount.

It's a small amount to be setting up as trusts, that's a fact.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You are making this way too complicated for so little money.

not me. my parents And.. for somebody with $3k-$5K total savings $150K is not little.

Lawyers exist for this reason. If you do it half-assed, don't be shocked when you lose 50% of it in a divorce.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Only on DCUM would someone say that $150k is a small amount.

It's a small amount to be setting up as trusts, that's a fact.

You're paying to exert the control you want and avoid the disaster that will be this sibling relationship. That's not free, but it may be worth it.

[Anonymous]

With that amount of money, I would just have the parents open a separate account for her $150k and list her as pay on death beneficiary. It doesn't go through the estate and can be paid directly upon showing a death certificate. Just make sure she puts the money into an account she opens in her name only, and it won't be considered a marital asset. The parents will control it before death, but of course, she'll be free to spend it how she wants at that point. If your concerned with what she'll do with it after their death, then you'll probably need to do a trust - but honestly at that point, it really should be up to her.

My husband inhereited a couple of bank accounts from his Aunt that way. She new she was dying of cancer and went into the bank to have them changed to pay on death. It was pretty simple.

[Anonymous]

Anonymous wrote:With that amount of money, I would just have the parents open a separate account for her $150k and list her as pay on death beneficiary. It doesn't go through the estate and can be paid directly upon showing a death certificate. Just make sure she puts the money into an account she opens in her name only, and it won't be considered a marital asset. The parents will control it before death, but of course, she'll be free to spend it how she wants at that point. If your concerned with what she'll do with it after their death, then you'll probably need to do a trust - but honestly at that point, it really should be up to her.

My husband inhereited a couple of bank accounts from his Aunt that way. She new she was dying of cancer and went into the bank to have them changed to pay on death. It was pretty simple.

Op here. Seems all suggestions somewhat complicated. I am really not looking tone watching and managing my sister's spending. But at the same time I know parents want equal and best for my sister. And she knows she can spend it not wisely after which she may internally be upset that money parents earned hard gone for nothing ( parents immigrated to US in their late 40s and earned every penny here while supporting me through masters and her through bachelor's) . Just not sure what to suggest to the parents as far as how to help her make right decisions with the money.

[Anonymous]

Anonymous wrote:If it's put in your name while they are alive, it's not an inheritance, it's a gift. It wouldn't be treated as a seperate asset like an inheritance would, because it's not one.

What is your parents goal here? How much money? There are probably better ways to do whatever it is they are trying to do.

This is exactly correct. Your receiving a gift, totally different and your exhusbands would get 50% of your share.

[Anonymous]

You should probably talk to an attorney or financial advisor.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Only on DCUM would someone say that $150k is a small amount.

It's a small amount to be setting up as trusts, that's a fact.

No. It's not. That's a fact.

Trusts are (or can be) very simple and very inexpensive to establish.

[Anonymous]

We've got multiple issues here.

1) Not sure why they wouldn't open two separate accounts, trusts, etc., instead of the headaches that come with a joint account. If an account is in "Larla and Marla" then either one can empty the account w/o recourse.

1a) There's probably all sorts of issues with getting a "two signatures needed" account as that is a relic of the Bad Old Days when the little woman couldn't take money out of the account without her husband's okay. Might be easier if a trust were set up in that case.

2) A trust is probably easier to shelter during divorce than an outright gift. In your case with a long-term marriage, a smaller nest egg, etc., it might not be worth the hassle and just give it as a $50k gift -- pay off one of your cars, clear the credit cards, etc. In your sister's, with her worse track record, marriage not 100% (maybe 80-90%?), etc., etc., it might be more worthwhile.

3) A trust could probably be easier to protect against any riotous living OP's sister in engaged in. So if the sister just wants to give 50k to fund her husband's or boyfriend of the month's cockamamie idea, the trustee can say no.

4) Also consider that either or both husbands might wonder what's going on with this elaborate setup to be kept away from a bit of money. For example -- if my wife's parents were to give us 50k, I'd be paying off the car notes in no time flat and freeing up $800 a month in cash flow. I'd be wondering what was up if she wasn't on board with that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Only on DCUM would someone say that $150k is a small amount.

It's a small amount to be setting up as trusts, that's a fact.

No. It's not. That's a fact.

Trusts are (or can be) very simple and very inexpensive to establish.

I'd imagine it's proportional to the level of complication of the rules ... a simple trust that just says "pay X dollars a month for Y amount of time", sure there's boilerplate for that, but a trust that says "withhold money if the beneficiary doesn't have a kid by age 30, yadda yadda" would probably require some specialized work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Money given to one spouse during the marriage is fair game in a divorce. The exception is an inheritance (money distributed from an estate after someone dies) where the money is held separately in an individual account throughout the marriage, not commingled with joint assets.

so just to clarify - money given to one spouse during marriage will always be considered up to division after divorce even if that money always held separately?

Yes

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Money given to one spouse during the marriage is fair game in a divorce. The exception is an inheritance (money distributed from an estate after someone dies) where the money is held separately in an individual account throughout the marriage, not commingled with joint assets.

so just to clarify - money given to one spouse during marriage will always be considered up to division after divorce even if that money always held separately?

Yes

I've read articles that say it varies by state, and in some places it could be considered a seperate asset, assuming it was always held seperately.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Depends on the state. General rule is keep it separate and don't use it for anything joint.

Virginia. We will be able to use the money for either emergencies or large payments. Say my sister finally buys house (they can afford monthly payments but do not have downpayment). If she uses money for downpayment, and hosue in both names, at divorce they will have to split proceeds 50-50?

Most likely, yes.

100% wrong. If the items our purchases are tangible AND kept separate (so they can be traced out), the items are separate. For example, a withdrawl used to pay credit card debt is t tangible and will be gone in a divorce. Money used for a downpayment would be separate unless she can't trace it back to the initial withdrawl from this account. For example, 2 years after buying the house she refinances and takes lots of equity out. The downpayment may be considered gone as a separate asset (since remaining equity could just as easily be from mortgage payments. Make sure all records of the transfer from your parents are kept, that NO dollars other than gifts from your parents are deposited into the account, all records of purchases and withdrawals from the account are maintained and, if possible, have her husband sign a document when buying something confirming it is your sister's separate property.

Signed,

A VA divorce atty

[Anonymous]

Umm you need a lawyer, not DCUM