A recent article in the Wall Street Journal pointed out that Massachusetts is one of the country’s few “kitchen sink” states. No, that has nothing to do with cooking or even kitchens, for that matter; it has to do with how property is divided during a divorce.
As you probably already know, divorce involves dividing marital property between the two spouses. Kitchen sink states like Massachusetts typically do not differentiate between marital and separate property during a divorce like most other states do. Almost all property is considered part of the marital estate and subject to division.
On the other hand, “dual classification” states usually identify what property is separate and not subject to division during divorce. That makes it easier to keep property such as inheritances with one spouse only during a divorce if that was what the person who handed down the asset intended.
Keeping an inheritance away from a former spouse during a divorce in kitchen sink states like Massachusetts takes a little more planning. As the Wall Street Journal pointed out, one of the most effective ways of doing this is by creating a trust.
Property and financial assets can be placed into a trust that contains provisions barring the assets from going to the beneficiary’s ex in case a divorce should occur. The trust can then override state law by preventing the inheritance from being included in the marital estate.
Although no one wants to think about their child or grandchild getting a divorce, the fact is that around half of all marriages do eventually end in divorce, so it is wise for people who want inheritances to remain in the family to have a plan in place.
For more information on the benefits and protections afforded by creating a trust, talk to an experienced estate planning lawyer in your area.
Source: The Wall Street Journal, “How to Keep Your Inheritance in a Divorce,” Neil Parmar, Nov. 9, 2014