Chayet & Danzo, LLC Chayet & Danzo, LLC www.Coloradoelderlaw.com
Call for a Free Initial Consultation
Direct 303-872-5980
Toll-Free 888-472-1088
Email Us
Compassion, talent and dedication: guiding colorado families and Their Trusted Advisors During Times of Need

Inheritance and creditors: How to help protect your loved ones

For many people, a crucial piece of planning their legacy is helping their loved ones. By passing assets to those you care about, you can continue supporting them long into the future. This plan can become problematic, however, if the person to whom you want to leave an inheritance has debts.

A creditor taking a bite out of a legacy is not part of anyone's estate plan. Here is what you should know to plan ahead.

Creditors and inheritance

Many people wonder whether it's possible for a creditor to pursue repayment out of an inheritance. They can't do so directly, but there is one option many aggressive collection agencies use.

While a creditor isn't able to simply demand part of the money from an inheritance, they can file a lawsuit. The creditor might then receive a judgment, allowing them to collect from the debtor. It could be through wage garnishment, a bank account levy order or even via a property lien.

So yes, a creditor could find a way to take a bit out of an inheritance you leave a loved one. Options exist, however, to ward off such actions.

Leveraging a trust

A trust, at its core, is a legal entity that holds certain assets for a specific person or people, and for a specified purpose. The person creating the trust - referred to as the grantor or trustor - sets these stipulations and directions.

There are different types of trusts, and within those types, even further variations meant to address certain concerns or achieve precise goals.

When you put certain assets and property into the trust, you no longer legally own them - the trust does. You then appoint a trustee to manage its contents based on the guidelines you created. It's also possible to use a will and trust in concert together to accomplish this, something an experienced attorney can help you set up.

When it comes to shielding inheritance from creditors, you'll likely want to consider what's called an irrevocable trust. Once created irrevocable trusts are difficult to modify, but they have a benefit: In general, creditors can not come after assets that are part of an irrevocable trust.

That means if you use an irrevocable trust to pass inheritance to a loved one, it is much more protected than if you were to use a will. This helps ensure your wishes are followed, and the person to whom you're passing a piece of your legacy is shielded from opportunistic creditors.

Estate planning can be a complicated endeavor. Because of this, it's generally a good idea to enlist the help of an attorney. They can help determine the best options for achieving your goals, while ensuring all the necessary documents are properly written, legally valid and will hold up under scrutiny.

No Comments

Leave a comment
Comment Information

Watch Our Firm Video

We are the premier Elder Law firm in the Colorado region. We set ourselves apart from other law firms in the area with our talent, dedication, compassion and ability of our attorneys to handle any case in Elder Law. We serve Colorado families with experience and dignity in your time of need.

View More Videos

Denver Office
650 S.Cherry St., Suite 710
Denver, CO 80246

Toll Free: 1-888-472-1088
Phone: 303-872-5980
Fax: 303-355-8501
Denver Law Office Map

Edwards Office
105 Edwards Village Blvd.
#D-201
Edwards, CO 81632

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Edwards Law Office Map

Aspen Office
600 East Hopkins Avenue
Suite 301
Aspen, CO 81611

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Aspen Law Office Map

  • Rated by Super Lawyers Macro Chayet SuperLawyers.com
  • Rated by Super Lawyers Frank J. Danzo, III  SuperLawyers.com
  • Member National Academy of Elder Law Attorneys, Inc. TM
  • Avvo Rating 10.0 Superb Top Attorney Elder Law
  • 2015 Five Star Professional Wealth Manager Multi-Year Winner
  • Our new 2015 Medicaid Book: how to protect your Family's Assets from devastating nursing home costs
  • Proud Sponsor 2015-Denver Colorado Senior Law Day
  • Peer Review Rated For Ethical standards & Legal Ability TM Martindale Hubbell
  • Haystack