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Attaining a dual layer of protection for one's heirs

The feeling of knowing that one's family will be taken care of even after an individual's death is a great comfort to many in Tennessee. Setting up an estate plan to facilitate the transfer of wealth from one generation to another is often viewed as a privilege, more so than a responsibility. For those who are seeking the greatest possible level of protection for their heirs, a dual-pronged approach might be worth considering.

Transferring assets into a trust is a great way to protect an inheritance from loss. Because the trust itself, and not the beneficiaries, is the technical "owner" of the assets held in trust, those assets are protected. It is difficult to compel an individual to hand over wealth that he or she does not have ownership rights to, which is why trusts are such an attractive estate planning option.

One of the biggest financial risks that any individual faces involves getting married and subsequently divorced. During the property division portion of a divorce, a significant portion of wealth will be handed over to one's spouse. In the case of inherited wealth, that transfer may be in direct opposition to the wishes of the person who created the inheritance.

In addition to handing down wealth in trust, Tennessee residents should also consider encouraging their intended heirs to draft a prenuptial agreement prior to heading down the aisle. A prenup can specifically address an expected inheritance and stipulate that those assets are not to be considered marital property in the event of a divorce. Having both of these measures in place can help ensure that one's intended heirs are able to make use of the wealth that is passed down.

Source: wealthmanagement.com, "Defeating the Three Big, Bad Wolves of Estate Planning", Robert T. Napier, May 12, 2016

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