Charlotte Lockhart: Top tips to ensure you don’t pay off someone else’s debt with your inheritance

By Charlotte Lockhart, Perpetual Guardian Consumer Advocate

We love our children ‘warts and all’. We would do anything to protect them and ensure their success and wellbeing in life, but what would happen should your children suddenly inherit from you and that inheritance is spent on their spouse or partner’s debt?

We never really know how much influence a spouse or partner has on our children. If an inheritance is not correctly protected, it could be lost through their relationship and debt.

How would you feel if your hard-earned assets were in fact granted to your child’s other half through bad planning, or if the inheritance passed onto your children subsequently became ‘relationship property’ and available to their spouse or partner’s creditors?

By establishing an Inheritance Trust, whereby you don’t leave your estate to your children but to a Trust you establish for them during your lifetime, you can ensure that should debt or relationship failure occur in their life, it won’t cause the loss of inheritance for your children.

By adopting this course of action, your children will be able to make their own decisions knowing their inheritance is protected in a vehicle which can also provide those advantages that come with a Trust, and which are more relevant to younger people and the issues they face at their time of life.

The advantages include:

• Ring-fencing assets for a particular child and his or her family;
• Better protection against creditors of the child, as Trusts created by parents for a child are far more protected than Trusts created by a child;
• Giving the surviving spouse the opportunity to retain some control over the asset for the child (if deemed necessary), in that the asset can be transferred to a Trust controlled by persons other than the child until a date deemed appropriate for the child to take control.

To avoid risk or concern, take action, plan and discuss with your family. This will provide peace of mind and certainty for them and you.

About Charlotte:

Charlotte Lockhart is a business leader with more than 25 years’ experience in multiple industries locally and offshore. She watches out for the estate planning interests of New Zealanders in her capacity as a consumer advocate at Consumer Voice. Charlotte’s goal is to break down some of the perceived barriers and raise awareness by engaging with a variety of media and stakeholders.

In a previous role, Charlotte was head of partnerships and marketing at Perpetual Guardian (New Zealand’s leading trustee services company). During her time with Perpetual Guardian, Charlotte designed and implemented the new brand strategy and installed the new sales team across New Zealand. Perpetual Guardian believes that every adult New Zealander should have a Will and that every child deserves the protection of one.

Charlotte has an extensive background beyond the fiduciary services market, having worked in the financial and legal services sectors earlier in her career. In her 12 years with Mike Pero Mortgages, she won awards for her advisory services. She is passionate about ensuring New Zealanders protect their families and themselves from financial and legal problems which can often be avoided with a little planning.

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