Do you have an inheritance coming soon? There are several reasons you might not want this money or property in your personal name. Here's why…
Judgments, liens, financial problems, marriage, lawsuits, estate planning, visibility.
Your inheritance is subject to any sort of personal financial problems such as civil judgments or tax liens. In the county you reside there is a recorder of public records. They keep track of real estate transactions, court orders, etc. The county recorder's uses the term, “general index.” Go here to see how you search in San Diego County. Then select document type.
Your inheritance could be at risk if you have any outstanding monetary obligations in the public records. It could easily ruin your day.
Any funds deposited to your personal bank account could be instantly frozen, then attached and withdrawn by a creditor. You'd quickly learn the term, “withholding order.”
Let's say you are getting $900,000 in cash from grandma's brokerage account. If you have an outstanding tax lien or a civil judgment for $150,000 then you will only net $750,000 after payoff.
Another situation is marriage. Maybe you are engaged, married or have a pending divorce. In each situation your inheritance could be part of the marital community property or attachment. If you want the inheritance to remain independent of legal marriage, then you need to keep it outside.
Or you might want this inheritance, or a portion, passed directly to your heir? Maybe you have children from a previous marriage that need help with medical, educational or life expenses. And you can keep the money safe from the heir’s marriage or financial problems. Your current spouse is financially comfortable. Avoid family conflicts or issues.
What You Can Do
Setup a trust to receive the inheritance funds. It remains legally independent of you personally. It gets a trust bank account. Meanwhile you’re in control of the funds. It’s the safest way to steer clear of personal risks.
Some people might tell you to use a corporation or LLC. But that is old school thinking. This is because those organizations are also public records. Plus they’re costly and burden you with state government bureaucracy. Business identity theft is now a problem for corporations and LLCs. A private trust is anonymous and confidential. No public records. Your inheritance is safe from personal problems, hackers, and nosy people.
By having property in a different name (trustee) a judgment will not attach to your inheritance. There is no system to identify any private trust over which you have control. Meanwhile you can sort out how to resolve the outstanding debt on your terms.
If you have settled or cleared old liens or judgments – make certain they are cancelled in the County Recorder's files. This will help avoid any future surprises when you have a time sensitive transaction underway.
And if you’re planning to make major investments standing behind a trust curtain can give you a negotiating advantage.
A trust keeps the inheritance confidential and safe from nuisance lawsuits. Grifters and their lawyers are always looking for an easy mark. Make yourself a difficult target.
If you have an inheritance forthcoming, keep it clear from all types of personal risks. Use a private business trust for safety and control. It can work for you, and your heirs too.