The following is a guest blog post by my colleague Justin Kelsey of Kelsey and Trask, P.C. in Natick, MA.
Your Child’s Ex Could Receive a Portion of Your Estate!
One More Reason to Talk to Your Children about Estate Planning.
Consider this hypothetical: You meet with your estate planning attorney, and tell the attorney that you want to transfer your home to your children now because you don’t want it to be used to pay for your long term care. You asked your children if they would be okay with owning the home and having you still live there. Your children told you that would be fine and you didn’t discuss it any further.
Your estate planning attorney asks about your financial situation and your plans, explains the potential consequences of transferring the property to your children now (giving them the ability to sell it, etc.). But you trust your children, so you transfer the property. You didn’t think to tell your estate planning attorney, however, that one of your children was in the middle of a divorce.
That child is now required to disclose your home on their financial statement in the Probate & Family Court proceeding because they have an actual ownership interest in it. The Judge then orders your child to pay to their ex-spouse twenty-five percent of their share of the home as part of the marital division of assets.
Unfortunately, I represented a client who experienced a scenario very similar to this. The worst part was that if the estate planning attorney and divorce attorney had been aware of each other and been put in contact with each other, it’s likely that the ex-spouse would not have received any portion of the family home.
In Massachusetts, inherited property, trusts, and even non-vested estate plans can be considered by the Courts in dividing property. While some Judges will give greater weight to the contribution of that property, i.e. whose side of the family it came from; many Judges will treat it like marital property, especially if a lot of time has passed since it was transferred. In addition, the Probate and Family Court can consider potential inheritance as an opportunity for “future acquisition of capital assets and income” and award alimony or assign an uneven distribution of the other marital property to one spouse or the other based on that consideration.
Honest and open communication with your children and your estate planning attorney can avoid potential costly mistakes such as this. In addition, if you’re not sure if one of your children might have marital problems, don’t be afraid to ask your estate planning attorney to consult with a divorce professional about the potential consequences. The same is true if you’re worried about a child on the edge of bankruptcy.
Your estate planning attorney can help you protect your assets only if you give them all the necessary information. Share any thoughts you have about your children’s financial or marital circumstances with your estate planning attorney to ensure you are also protecting your assets from ex-spouses and creditors.