(PRWEB) August 09, 2012
The Law Firm of Pozzuolo Rodden P.C., announces the release of the article " Protecting Your Children's Inheritance In The Event of a Divorce." Below is a sample of the first couple of paragraphs. If you would like to read more, please read the full article and other corporate or estate planning topics at http://www.pozzuolo.com/Pubs_Newsletters.shtml
Protecting Your Children's Inheritance In The Event of a Divorce
While your child eagerly plans her future with her fiancé, you do not desire to ruin the romance or upset her significant other by focusing on the possibility of divorce and the economic consequences it may have. However, in today’s society nearly fifty (50%) percent of first marriages end in divorce and it is prudent and in the best interest of all parties to be open and honest regarding the legal and financial consequences of severing such unions prior to their making. Divorce proceedings can often be a drawn out lengthy and expensive legal battle, some which could be alleviated by the foresight of couples and their families discussing and agreeing upon financial matters prior to marriage. Parents should consider the financial implications their child’s divorce may have on any assets bequeathed to their child. During a divorce proceeding, a significant portion of your child’s inheritance may be granted to their divorcing spouse if the assets are not properly protected from equitable distribution. Establishing a trust or prenuptial agreement can offer your child such needed protection in the event of divorce.
Under Pennsylvania law “marital property” is subject to equitable distribution during a divorce. Marital property is all property acquired by either spouse during the marriage and property is presumed to be owned jointly by both husband and wife. Equitable distribution allows the court to divide the marital property as it deems fair based on a number of factors, including, but not limited to, the length of the marriage, the parties’ incomes and ability to earn, the standard of living during the marriage and whether either spouse will be the custodial parent of any minor children of the marriage.
However, there are exclusions to “marital property” under Pennsylvania law. One such exclusion to the definition of marital property subject to equitable distribution is any property acquired by gift, bequest, devise or descent or property acquired in exchange for such property. This means that originally gifts or bequests given to a child are excluded from the definition of marital property subject to equitable distribution in the event of divorce.
While this may give parents a pause for relief to believe their gifts or bequests to their children are protected from equitable distribution, that relief is misguided depending on whether by their child’s use of the gift or bequest it becomes marital property. Pennsylvania courts have found that if these excluded funds become co-mingled with marital funds then they lose their exempt status. Thus, if inherited assets are used to purchase a home jointly with a spouse, the entire asset then becomes marital property subject to equitable distribution.....
If you would like to read more, please read the full article "Protecting Your Children's Inheritance In the Event of a Divorce" and other corporate or estate planning topics at http://www.pozzuolo.com/Pubs_Newsletters.shtml
Pozzuolo Rodden, P.C. provides specialized cost-effective legal services to privately held business owners and high-net-worth clients in Pennsylvania and New Jersey in excess of 35 years.
Business planning and transaction, complex business litigation, commercial real estate and development, construction law and litigation, advanced estate planning and administration, tax and pension law, high profile and intricate family litigation, and employment law and litigation.
Pozzuolo Rodden, P.C.
Counselors at Law
2033 Walnut Street
Philadelphia, PA 19103