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Serving: West
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OUTLAWS: Without proper planning, in-laws or other family members can become outlaws if there’s a dispute over asset ownership.

Get protection from outlaws

The “Old West” isn’t the only place where outlaws reside.

By Michael A. Dolan

In the 1800s, in the wide-open West, outlaws roamed the range, looking for opportunities to take advantage of hardworking farmers, ranchers and their families. As communities grew and organized, modern law enforcement brought peace and safety to the once “wild” West.

But are we safe from outlaws today? And, if we are not, how do we protect ourselves and our family from the outlaws?

Let me share an example.

Bill was at the local café having a cup of coffee and waiting for the guys to arrive to discuss the important topics of the day. Sitting quietly, he overhears the conversation in a neighboring booth. Much to his surprise, they are talking about his wife, and sadly he discovers his wife's infidelity. Despite their best efforts to save their relationship, the marriage was over. Unfortunately, the spouse was about to become an outlaw.

Bill's father had died 10 years prior and left him a substantial farm and ranch operation. During their marriage, Bill had lovingly added his wife’s name to the title of his assets. This created significant challenges in determining what were his inherited assets, and what was the marital property. Being unable to clearly determine the difference, the judge divided all the assets between Bill and his unfaithful wife, including his substantial inheritance.

The value of a trust

It didn't have to be this way. If Bill's father had done a thorough estate plan, he would have left the inheritance to Bill in trust. Bill would control and manage the trust, but the trust would help him keep the inherited assets separate from the marital assets. If Bill used and enjoyed the assets inside the trust for his and his family’s benefit, and did not remove them from the trust, he could have easily identified the inherited assets in the divorce. As a result, the inherited assets would have been his separate property and would not have been divided. While we hope our children have chosen their spouses wisely, unfortunately, the divorce rate remains right at 50%.

This type of planning is often perceived as placing restrictions on Bill. However, if it is properly designed, Bill would have practical control over all aspects of the use, operation and/or sale of the trust assets and would also have substantial protections. Stories run through communities of families whose assets are controlled by banks or lawyers who are appointed as the trustee of trusts. These situations only occur when the plan is not drafted to focus on family control. However, all the benefits of using trusts effectively can be accomplished without giving up practical control to someone outside the family.

A properly designed estate plan can provide many additional advantages that protect your family. Individuals should look closely at all the benefits a properly designed estate plan can provide them while they are alive — and provide their families after their death.

Dolan, an attorney, helps farm and ranch families achieve comprehensive estate, succession and legacy planning objectives. He is the principal of Dolan & Associates P.C. in Brighton and Westminster, Colo. Learn more on his website, estateplansthatwork.com.

 

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