For financially stable families in Michigan, a great deal of pride may be taken in the act of leaving a significant inheritance to a family member. However, Michigan residents may want to consider the downside of leaving a family member a large sum of money. For some families, the concern may lie with what a beneficiary will do with his or her inheritance. For other families, concerns may stem from wanting to protect assets from tax or other liabilities.
One tale of an inheritance situation gone wrong involves a man who was a real estate developer. The man took out a $25 million loan for a condominium project. The project failed when the recession hit, and the man defaulted on the massive loan. In the midst of this financial crisis for the man, his uncle passed away and left him a significant amount of money.
The man inherited a co-op worth roughly $20 million. Because of the man's debts, the bank ended up with the inheritance. According to experts in the field, if the uncle had bequeathed the man a trust, the money would have been protected.
For some Michigan families, lessons about how to effectively leave an inheritance may come too late, and fortunes may be unnecessarily lost. However with proper guidance and planning, a family can leave an inheritance that can provide for beneficiaries for some time. Hard-earned wealth that last for generations is possible when trusts are created and individual family needs and situations are taken into consideration early in the estate planning process.
Source: observer.com, "A Matter of Trust: Simple Ways To Protect Your Inheritance", Alyson Martin, April 9, 2015