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Depending on your family situation, there may be a son-in-law or daughter-in-law you just don’t trust. But what risks need to be addressed when planning an estate? In this outtake from a recent conference Jeff taught at, The Estate Planning Source’s Advanced Institute, he examines the types of risk most on his client’s minds.

Protect the Family

Hopefully, no one has clients that have these types of problems, but they do exist and my clients talk to me about them. The way I generally approach this is when I’m sitting down in that first strategy session and I’m working with them I start with “tell me about the family.” “What do the kids do for a living, are they good with money?” “Tell me about the spouses and what do you think about them.”

If they immediately go, oh gosh. I really don’t like my daughter-in-law Becky. There’s something; I just don’t have this easy feeling. I think we might need to do something. I know right away to start discussing this type of thing.

So the typical married couple with everything to the kids equally. Well, what happens if one of the kids dies before they do where it would go to the grandkids, which is a standard thing? If what if the money goes to the kids and then they pass? So you have already given them their share of the family wealth from your clients. What happens?

Co-Mingling

Now there is the divorce and the co-mingling. I see this all the time. And I give a hypothetical example, I used to feel bad. Is anyone here like a personal trainer or married to one? I don’t feel so bad anymore because one of my best friends growing up just finished his divorce because his wife was running around with her personal trainer.

So what sometimes happens is when the kids inherit that wealth, their spouse is whispering in their ear, oh now we can get that dreamhouse we’ve always wanted. We’ve got the money from your parent’s estate, we can do that. Oh okay. They get a real estate agent and start looking around. Then talking about financing, no we have the money we’ll pay cash for it. Let’s get the information over to the closing attorney. So they get the house.

A few months or years later and one of them wants a divorce and half the house. But all that money came from my parents. Yeh but I talked with a divorce attorney and you co-mingled it. And they are right!

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