Protecting Inheritance

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Protecting Inheritance

Unread postby ontherocks » Thu Dec 07, 2017 7:34 pm

New to the forum and sadly, it looks like my marriage is on the rocks headed for divorce.

I'm living in Florida and recently inherited a large multi-unit rental property in California. I've been very careful not to co-mingle money between the personal (joint) accounts and the rental property account.

Question: I believe that the actual real estate asset is protected as my sole and separate property but my question is what about the income it produces? Note: The property title is not held jointly.

Question: I had heard that if I wanted to use some of the money from the rental units and avoid co-mingling, I could write a check from the rental account to the joint account and state on the check "Gift to Marital Assets" and I would be safe as long as I maintain a clear paper trail. Is this true?

Thanks in advance
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Re: Protecting Inheritance

Unread postby dad2grls » Thu Dec 07, 2017 9:26 pm

State laws probably vary but I can tell you this much.. keeping the funds separate as you have suggested will definitely go a long way towards protecting you- I wouldn't even mingle the funds with martial accounts at all- just keep them in a separate account- why would you need them if you haven't had that income all along?

I'd guess that your inheritance would be protected but the income it produces could be used to calculate spousal support.
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Re: Protecting Inheritance

Unread postby LovingDadof2 » Fri Dec 08, 2017 6:41 am

^ +1 Agree.

I would never commingle any of the inherited assets with marital... ever. Open a separate bank account and put all the rental property funds there.

As was correctly noted, any income thrown off by this rental property will be accounted for in your SS and CS calculations if applicable? So, if possible, keep the income to a minimum by offsetting with expenses. Otherwise, while your STBX won't be able to get a piece of the property (if properly kept separate since you inherited the gift), she's certainly entitled to the income it generates.
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Re: Protecting Inheritance

Unread postby Tom Kirkpatrick » Sat Dec 09, 2017 2:11 pm

ontherocks wrote:New to the forum and sadly, it looks like my marriage is on the rocks headed for divorce.

I'm living in Florida and recently inherited a large multi-unit rental property in California. I've been very careful not to co-mingle money between the personal (joint) accounts and the rental property account.

Question: I believe that the actual real estate asset is protected as my sole and separate property but my question is what about the income it produces? Note: The property title is not held jointly.

Question: I had heard that if I wanted to use some of the money from the rental units and avoid co-mingling, I could write a check from the rental account to the joint account and state on the check "Gift to Marital Assets" and I would be safe as long as I maintain a clear paper trail. Is this true?

Thanks in advance
Your marriage is on the rocks. Divorce is in your near future. Why would you want to gift anything to the marriage??

Income generated from those rentals can be used to calculate alimony and child support. I suggest you set up a trust.....or perhaps an LLC.

Perhaps the apartment complex can remain property of the estate/LLC??.....with income generated remaining assets of the estate/LLC??.....and those assets can be reinvested in the name of the estate/LLC??

You're gonna need an attorney that specializes in such matters.

Tom
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Re: Protecting Inheritance

Unread postby ontherocks » Tue Dec 19, 2017 7:59 am

I met with an Attorney from Cordell and Cordell. I thought the the question was quite simple yet they couldn't answer my question :?:

Scenario:
- I inherited a multi-unit rental property (real estate)
- The rental property nets approx $4000 per month in income
- The rental property income and expenses are in a separate bank account in my name only
- Some of the rental income is periodically transferred to the joint account and used as community income within marriage.

Question:
- In the event of divorce, could the marital use of rental income from the inherited real estate jeopardize the protected status of the real estate its self? In other words, if we divorce could she come after the actual real estate claiming the inheritance has been commingled?

Lastly, does anyone know of a really good attorney in northern Florida that specializes in this kind of thing?

Thanks
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Re: Protecting Inheritance

Unread postby TJinCA » Tue Dec 19, 2017 10:44 am

ontherocks wrote:I met with an Attorney from Cordell and Cordell. I thought the the question was quite simple yet they couldn't answer my question :?:


Well if you couldn't get a straight answer from a licensed attorney who has graduated from law school, passed the bar and presumably has some practice experience I'm not sure how much stock you can put in an internet answer. That said, my relatively uninformed and certainly non-expert thoughts below.

Question:
- In the event of divorce, could the marital use of rental income from the inherited real estate jeopardize the protected status of the real estate its self? In other words, if we divorce could she come after the actual real estate claiming the inheritance has been commingled?



I think she can come after anything she wants, and a clever lawyer on her side can probably come up with some kind of rationale for why she should get it. Your job and your lawyer's is to come up with an opposing argument based on facts and law that will shoot down her attorney's rationale.

I think you've got a reasonably good case that the underlying real estate assets you inherited have not been commingled and would remain your separate property. Rental income that you've taken from them would probably be a marital asset subject to division (but again, you can argue anything, it's up to you and your attorney to see what you can convince the judge to rule on). Future rental income would not be property subject to division, but would be counted as income to you in calculating your ability to pay child support and/or spousal support.

In addition, Florida is an "equitable distribution" state so if you have large, income-producing separate property assets that might lead a judge to award a larger share of the marital property to your wife. That may be why your attorney couldn't give you a simple answer.
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Re: Protecting Inheritance

Unread postby TJinCA » Tue Dec 19, 2017 10:55 am

Adding to my last, having spent a couple of days in court with my lawyer and having seen the bill for that, I'm an even bigger fan than I was before of negotiated solutions.

What if you offered your wife half of the cash in the rental account, plus half or maybe a little more of the other marital property, and you keep the rental properties and future rental income. Do you think she'd go for that?
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Re: Protecting Inheritance

Unread postby grandet2 » Tue Dec 19, 2017 12:22 pm

Actual assets - inherited = she will not be able to claim part of these.
Income from said assets after marriage - rest assured that she will come after it and courts will probably add it up to calc your income, you don't need an attorney to figure that out, look at state guidelines for CS/Alimony. It will spell out exactly what is countable and what is not. If you file it in your Federal taxes, guess what...

Go the route Tom suggested, keep the assets and income in a separate entity. You need to keep her sleeping and make up with her while you get this stuff ready and move the assets out and any monies.

But her some roses and be extra nice to her in the mean time.
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Re: Protecting Inheritance

Unread postby Tom Kirkpatrick » Tue Dec 19, 2017 2:42 pm

ontherocks wrote:- Some of the rental income is periodically transferred to the joint account and used as community income within marriage.
Periodically??
Specifically, how frequently??.....over how long a period??....and, in terms of real dollars, how much income are we talking about??

Here's the deal: Instead of periodic income, think in terms of "periodic gifts" to the marriage. There's a difference.

How were these "gifts" spent??

Tom
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Re: Protecting Inheritance

Unread postby ontherocks » Wed Dec 20, 2017 6:21 pm

Tom Kirkpatrick wrote:
ontherocks wrote:- Some of the rental income is periodically transferred to the joint account and used as community income within marriage.
Periodically??
Specifically, how frequently??.....over how long a period??....and, in terms of real dollars, how much income are we talking about??

Here's the deal: Instead of periodic income, think in terms of "periodic gifts" to the marriage. There's a difference.

How were these "gifts" spent??

Tom


To date, I've only moved $10k from the rental property account to our joint account on one occasion. I used it to help finance the move to Florida. I simply wrote a check to myself from the rental account and in the comments, I wrote "Gift to Marital Property". She doesn't even know about it because I manage all the finances. A trust attorney told me the same thing - if I don't do regular transfers and always specify "Gift to marital property" on the check, it would work. Because he was a Trust attorney however, he suggested I contact a divorce attorney which is why I meet with Cordell.

The Cordell attorney agreed with you guys that rental income would be considered during CS and SS negotiations and I'm fine with that. I just don't want her coming after the actual property.

I guess any attorney could make a argument for anything and there seems to be no precedent. I need a good attorney that's well versed in asset protection. There are probably things I should be doing now that I'm not. Anyone know a good one?
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