X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
dividing money Credit: Adobe Stock

Planning for wealth transfers to future generations is a tricky business. Attorneys counsel clients on the dangers of vesting too much wealth in a beneficiary who is too young to understand the responsibility that comes with such an inheritance. Typically, an attorney will recommend the use of a trust that restricts the distribution of the wealth until a child reaches a more “mature” age—often including staged distributions (e.g., 1/3 at 25, 30 and 35). A “staged distribution” trust allows the client to delay and/or spread out the receipt of an inheritance and to allow a trustee to manage those assets for an “immature” child.

While staged distribution trusts work well to accomplish the goal of protecting wealth for a young beneficiary, they do little to protect inherited wealth in the case of the beneficiary’s future divorce. In many states, including New Jersey, inherited assets are not generally subject to equitable distribution so long as they remain in the inheritor’s sole name and control. See N.J.S.A. §2A:34-23(h). But once distributed from a trust, they may be inadvertently or intentionally (without due consideration of the risks) comingled with marital assets, thereby placing those assets within reach of a claim for equitable distribution by a potential ex-spouse. Even if inherited assets are kept separate and apart from marital assets, they may nevertheless be considered as a resource for alimony and child support purposes, with respect to both the requirement to pay and the right to receive, and they may impact the manner in which marital assets are divided in a divorce. See N.J.S.A. §§2A:34-23 and 23.1.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Law Firms Mentioned

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

Library of New Jersey Family Law FormsBook

Find a wide variety of forms from initial summons through ADR, trial and relief, as well as non-litigation sample documents. Over 175 Model Documents are included in this...

Get More Information
 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.