Legal Question in Real Estate Law in Oregon

Re: protection of children's inheritance

I find that this is a common question asked by my estate planning clients. There are a variety of mechanisms that might help protect a child's inheritance from a divorcing spouse. A common solution is the use of an entity (like a trust or family limited liability company or partnership). The child would then inherit an interest in the entity rather than the property. Depending on how many children you have and how well they cooperate with each other, such a solution could be problematic. The creation of a family entity will require your children to cooperate in the operation of the business or management of the property.

It is also possible to specifically devise property to your child and state that you are not giving it to his or her spouse. This has to be done carefully and your child could unwind this work by later comingling either the inheritance or its proceeds with assets your child shares with his or her spouse. For example, your child inherits a commercial building and the child becomes the owner. The child then sells the building, puts the money from the sale in a jointly held stock account. This turns the separate asset into a joint asset. I have also seen situations where the child choses to add the spouse to the title, again, the effect is that the separate property becomes a joint asset.

No matter what you do to make the property your child's separate asset, the income from that property would still be taken into account when a divorce court examined income to determine child or spousal support.

It appears that you have a large amount of assets and likely a taxable estate (currently an estate valued at more than $675,000 is a taxable estate). With such assets, you should work with an attorney and accountant to properly plan your estate to reduce or eliminate estate taxes as well as to deal with the possiblity of a child's spouse obtaining rights to your property following your death.

Re: protection of children's inheritance

I have now received both messages. This one is a bit clearer. there are ways that you can divise and or gift property to your children and prevent spouses from having an interest in the property in the event of a divorce. However, in the event of a divorce, a court may still take into consideration the separate property of a child when determining such things as child support and such. The most common way to protect an asset is to create a trust or other entity and allow only income to the children. Other limitations can apply.