Trusts may be the best option for protecting inheritance

| Nov 1, 2012 | Trusts |

It seems to be a sad reality in today’s world that whenever a celebrity or famous person dies unexpectedly there will be a dispute about the persons’ estate and assets. Most of our Michigan readers probably saw the huge problems that the death of Michael Jackson caused within his family, and now it appears some similar issues may be arising in the wake of the unexpected death of Whitney Houston.

Houston had one daughter, 19-year-old Bobbi Kristina Brown, who was apparently designated to receive a $20 million inheritance from her mother through the use of a trust. Trusts can be an incredibly valuable piece of a comprehensive estate plan, allowing the planner to set parameters for the use and distribution of their wealth, whether it be through the use of a revocable trust or an irrevocable trust.

In the case of Houston’s daughter, however, a few family members seem to believe that the current structure of distribution for the $20 million inheritance is too much for Houston’s 19-year-old daughter to handle. Houston’s mother and sister-in-law have filed a court petition to restrict the release of the funds. When it comes to protecting inheritance in this way, they seem to be arguing that the funds were intended to provide Houston’s daughter with a lifetime of financial security – something that may not be able to coexist with handing a $20 million check to a 19-year-old.

The litigation in Houston’s case is just getting started, and, fortunately, there does not yet appear to be much animosity between Houston’s relatives. Hopefully, unlike in the case of Michael Jackson’s relatives, an amicable settlement can be reached. In any case, it appears that Whitney Houston had the right approach to her estate plan, because setting up a trust for an inheritance of the $20 million magnitude may indeed turn out to have been the best option for the benefit of her daughter.

Source: CNBC, “When $20 Million Is Too Much to Leave the Kids,” Robert Frank, Oct. 19, 2012