Dear Patricia, Most parents think the way you do. They don’t want to look down from above and see their ex-son-in-law driving a Lexus bought and paid for with their daughter’s inheritance. Normally, you do not have to worry about your childrens’ spouses inheriting anything from you. They will get nothing upon your deaths, unless you specifically say so in your wills or trust. What you have to worry about is what happens to the inheritance once it’s in the hands of your children.

An inheritance is separate property, but many children, either by mistake or on purpose, commingle their inheritance with community property assets, or even transmute their inheritance to community property. There are a couple of options available to you to help your children not do this.

The first is education. The trick to keeping separate property separate is to keep it separate. While that may not make much sense, it can be pretty simple. Your children should know to put any inherited assets into brand new accounts in their names alone, preferably at different financial institutions. Then, they need to know that they should never put anything else into these accounts that may be community property. If your children create trusts to avoid probate, these accounts should be identified as being their sole and separate property.

A better alternative is for you to leave your children their inherited assets within a family protection trust. The idea here is that if your children receive their inheritance within its own trust, with each child being his or her own trustee, your children will have a safer means of protecting the separate property nature of their inheritance. It’s meant primarily for the “good” children who are able to manage themselves. The trust will make payments to your child for purposes of support and education. The trust can buy a home for your child to live in, but it’s best for the home to be held within the trust. That way, if a child is divorced, his or her inheritance from you will be protected.

There are three other principal benefits to a family protection trust. First, since the child doesn’t really own his or her inheritance within the trust, it’s largely protected from creditors through the trust’s spendthrift clause, except for taxes and child support debt. Second, all or a large portion of the trust assets can be exempted from estate tax when your child passes away.

On top of all this, you have the ability to place restrictions on how your children may dispose of their inheritance upon their own deaths.

You can prohibit your children from leaving all or most of the family protection trust to their spouses, for example. With a family protection trust you can literally and legally create a dynasty intended to benefit your family for generations. -- Len & Rosie

Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, 996-4505, or www.lentillem.com. Len also answers legal questions each weekday, noon to 12:45 p.m., and Sundays, 4-7 p.m., on KGO Radio 810 AM.