What is the best way to leave any assets or life insurance to my domestic partner who is a felon & owes restitution? 17 Answers as of March 19, 2014

My partner and I were married in MA in 2005. My partner has a daughter who is now 22 years old. I have been in her life for 12 years and have raised her as my daughter also. Unfortunately my partner was convicted of embezzlement and is in federal prison. She will owe a large restitution when she gets out. I have life insurance, 401K, property..etc. Originally I had my partner as the beneficiary for everything. She will now have restitution hanging over her for a long time and I changed the beneficiary to our daughter for fear it would be taken. How do i protect any money, life insurance, property etc so my partner receives or can access what i would leave so it could not be taken away? Our daughter would need to be taken care of until her mother gets out. Is there a way to keep this money safe from being taken by the IRS or have to go toward restitution. I need to know she will be provided for once I am deceased.

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Horn & Johnsen SC
Horn & Johnsen SC | Dera L. Johnsen-Tracy
Your objectives can all be accomplished by creating an asset protection trust for the benefit of your partner and daughter. If structured properly by an experienced estate planning attorney, the assets of the trust can be available for the needs of your partner and daughter during their lifetimes at the discretion of an appointed trustee and would be protected from their creditors. This trust would "spring" into existence upon your death and can be created through a revocable living trust or even by virtue of a testamentary trust created under your will. Once the asset protection trust has been established within your estate planning documents, you can then name this trust as the primary beneficiary of your life insurance policies and 401k plan. All other assets, after your final debts and expenses have been paid, could pass to this trust outside of probate through your revocable living trust or through the death probate process if you have a will-based estate plan. Each state has very specific laws regarding asset protection trusts, so it is essential that you consult with a qualified estate planning attorney to ensure your estate planning documents will ultimately accomplish your objectives.
Answer Applies to: Wisconsin
Replied: 3/19/2014
Goldsmith & Guymon
Goldsmith & Guymon | Dara Goldsmith
You need to speak with an experienced estate planning attorney about setting up a spendthrift trust and address other options if appropriate. This information is only intended to give general information in response to an inquiry. It does not establish an attorney client relationship. This response is only based upon the limited facts presented and is merely intended to assist you in determining if you should contact an attorney to provide you with legal advice.
Answer Applies to: Nevada
Replied: 3/18/2014
Ronald K. Nims LLC | Ronald K. Nims
The way to provide for the daughter and your partner is to set up a trust for your assets. The life insurance policy should show the trust as the beneficiary. The trustee must have the power to provide support for the daughter and the partner at his/her discretion and to allow the daughter and partner the use of trust assets without giving the assets to them. For example, if your partner needs a car, the trust can buy a car and own the car while allowing your partner to drive it. If the trust buys a car and gives it to your partner, her creditors could seize the car, but if the trust retains ownership of the car and merely lets her use it, the creditors can't touch it.
Answer Applies to: Ohio
Replied: 3/17/2014
Law Office of Jeffrey T. Reed | Jeffrey T. Reed
The best way would be to put the assets in trust for the health, education, and maintenance of both you partner and her daughter. I would find someone you trust to act as trustee.
Answer Applies to: California
Replied: 3/17/2014
Bruce Steiner Attorney at Law | Bruce Steiner
If you provide for her (in your Will) in trust rather than outright, her inheritance will be protected against her creditors.
Answer Applies to: New York
Replied: 3/14/2014
    Law Office Of Victor Waid
    Law Office Of Victor Waid | Victor Waid
    Suggest you consult with an estate planning lawyer who will probably advise the preparation of a trust with supporting documents.
    Answer Applies to: California
    Replied: 3/14/2014
    James Law Group
    James Law Group | Christine James
    You need an experienced estate attorney to put it in trust for them with a 3rd party trustee.
    Answer Applies to: California
    Replied: 3/14/2014
    Gates' Law, PLLC | Thomas E. Gates
    You asked this question yesterday.
    Answer Applies to: Washington
    Replied: 3/14/2014
    Minor, Bandonis and Haggerty, P.C.
    Minor, Bandonis and Haggerty, P.C. | Brian Haggerty
    There is no completely certain way to avoid the restitution. You could put some of the money in a trust for your partner, but a determined creditor, even if it couldn't reach the principal, could get an order attaching any money or property that was distributed from the trust. You could leave all to daughter, and trust her to take care of Mom.
    Answer Applies to: Oregon
    Replied: 3/14/2014
    Estrada Law P.C. | Michele Ungvarsky
    An asset protect trust sounds like it would be your best bet and would accomplish everything you are trying to do. Look for an Estate Planning Attorney in your area.
    Answer Applies to: New Mexico
    Replied: 3/14/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    You need to do some estate and asset planning, and therefore need to take all of the details to an attorney for advice and counsel as to what you can do, and the benefits and detriments of each potential action.
    Answer Applies to: Michigan
    Replied: 3/14/2014
    Edward L. Armstrong, P.C. | Edward L. Armstrong
    Your situation is a bit complicated but it is certainly one that occurs time to time. You are correct in taking your partner's name off of any assets that you own together. You don't mention in your description of the problem whether this is a same-sex marriage or a traditional marriage. I am guessing that because you referred to your "partner" instead of referring to her as "wife," that this is a same-sex union. At the present time, Missouri does not recognize same sex marriages so any assets that you owned jointly with your partner would be ordinary joint tenancy with right of survivorship as opposed to tenancy by the entirety (which would protect jointly owned assets in a situation such as yours). Probably the best scenario would be to create a trust with assets other than your retirement assets and restrict the circumstances under which your partner would have access to the funds. You would want to make certain that the trust included a "spendthrift" clause which would prevent your partner from anticipating her interest in the trust. You really need to seek the assistance of an estate planning attorney because these types of trusts have to be carefully drafted so as not to give too much control over the assets to your partner. It is this ability to control the assets which determines whether or not the party or parties to whom restitution must be made can obtain access to those assets. The trust could also include provisions for your partners daughter though apparently she is an adult and not entitled to mandatory support from her parent.
    Answer Applies to: Missouri
    Replied: 3/14/2014
    Frederick & Frederick PLC | James P Frederick
    You can leave the daughter as beneficiary and have her take care of her mother, as she sees fit. The only other alternative I see would be to set up a discretionary trust that would allow your partner to receive some funds, but the remaining funds would be sheltered from creditors. This should be set up by an attorney to make sure it is done right.
    Answer Applies to: Michigan
    Replied: 3/14/2014
    Kokish & Goldmanis, P.C.
    Kokish & Goldmanis, P.C. | Bernard H. Greenberg
    The best way to protect your partner is to leave any property or assets you wish your partner to benefit from in a discretionary trust with an independent person as the trustee. Contact an attorney specializing in trusts for further assistance.
    Answer Applies to: Colorado
    Replied: 3/14/2014
    Ashcraft & Ashcraft, Ltd.
    Ashcraft & Ashcraft, Ltd. | Randall C. Romei
    Create a living trust and deposit assets into the living trust. The living trust could benefit your partner with the income generated. The principal of the trust could be accessed for the benefit of your partner at the discretion of the trustee. The principal of the trust would be protected from creditors by a spendthrift clause in the trust. You must be very careful with the beneficiary designation of deferred income assets, like your 401K, to ensure limiting the tax consequences that could occur on with a distribution on death. It is possible to have a trust as the designated beneficiary with proper planning.
    Answer Applies to: Illinois
    Replied: 3/14/2014
    Law Office of Pamela Braynon | Pamela Y. Braynon
    You can place it in a trust in your daughter?s name with specific instructions as to how it should be used for your partner also. You would need to see an attorney on this.
    Answer Applies to: Florida
    Replied: 3/14/2014
    Robert E. Giffin | Robert E. Giffin CPA
    In trust, with a provision he does not get anything, but trustee can pay for his benefit.
    Answer Applies to: Ohio
    Replied: 3/14/2014
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