858.792.5988

Serving San Diego for over 35 Years

Clients, Colleagues, and Friends,

I retired on Dec. 31, 2019, and officially closed my office, after 42 years of practicing law. I thank you all for your confidence in me and your friendship over the years. My colleague David Dufek who has shared the suite with me for the past two years is taking over my practice and will have all client files. Not only will David be taking over the practice, he remains in the suite and is taking over my fax and phone lines. You are free to leave your files with David or pick them up. David's practice like mine includes will, trusts, and probate, as well as personal injury work. He also does landlord - tenant work and debtor - creditor matters including bankruptcy.

I wish you all the best.

Alex

How to Protect Your Child’s Inheritance from her Spouse

Whether you pass a large gift during your lifetime or an inheritance at your death, you are likely concerned that your child’s assets may be mishandled or taken by his or her spouse either during the marriage or during a divorce.  You can protect the assets you give to your child by transferring the assets to a trust to benefit your child, instead of transferring the assets to your child outright.

Matthew and Lorraine wanted to take advantage of the $5 million unified credit exemption, so they transferred $3 million to each of their three children, Frank, Tony, and Eloise.  They were able to do so without paying any transfer tax, because, in 2011, Matthew and Lorraine both had a $5 million exemption (total $10 million.)

Frank put the gift in joint names with his spouse and it become a marital asset; when he went through a divorce the next year, the $3 million was counted as part of the divorce settlement.

Tony’s wife, with his permission, used the $3 million to start and run a new software engineering firm.  The firm went belly-up within 4 years and the money was gone.

Eloise’s husband spent the $3 million dollar gift on drugs, cars, clothes, boats, and vacations.  He quit his job.

Fiascos like these really happen, but they can be avoided, whether you pass assets to your children during your lifetime or at your death.  The key is to pass the assets into a trust for your child, not to your child directly.  Especially if you have any reason to believe your child’s spouse is manipulative or controlling.

When in trust, the assets can be used for your child’s health, education, and maintenance, but are safe from an unethical spouse.

For the highest level of asset protection and to encourage good decision-making either have an independent professional trustee serve as sole trustee of the trust or have your child serve as co-trustee with a professional trustee.

Be sure to communicate with your child, emphasizing the importance of keeping assets in trust, not pulling assets out and putting them in joint names with a spouse or allowing a spouse to have access to them.   

If you would like to protect the assets you give to your child from his or her spouse, call our office at (858) 792-5988 for a consultation.  We look forward to hearing from you.