April 19, 2017

WTOP Interview: How To Protect Inheritances For Future Generations

LISTEN NOW: What you need to know to protect the inheritance you plan to leave to your children and grandchildren.
Nina Mitchell, Principal, Senior Wealth Advisor & Co-President, Colony Sports & Entertainment


SHAWN ANDERSON: There is a lot to consider when giving your children or grandchildren an inheritance—from when and how to let them know they will be getting it to protecting your gift from becoming the property of a future ex-spouse or another family altogether.

HILLARY HOWARD: Let’s find out more with Nina Mitchell; Senior Wealth Advisor and Partner at Her Wealth from Bridgewater Wealth in Bethesda. Nina, good to see you!

NINA MITCHELL: Thank you, I'm happy to be here.

HILLARY HOWARD: So, if you’re planning to give someone an inheritance, what’s the best way to tell the person who’s going to be getting it?

NINA MITCHELL: Well, discussing future inheritances can be very emotional and complicated topics, so it’s hard for both the parents as the donor and the children as the recipient beneficiary. For many parents, this is actually the first time that they're revealing their net worth to their adult children until naturally both parties have their own values and beliefs about money, so I'm not sure there's really a best way to tell the next generation about inheritances other than you have several open and honest conversations about your intentions and your concerns. I will also say it’s important to have your financial advisor engage with your attorney and all family members, this will kind of help lessen the emotion and maybe just move the whole process along a little bit faster.

SHAWN ANDERSON: What are some of the things we can do to protect an inheritance, either one that we're going to receive or the one we're going to give to our heirs?

NINA MITCHELL: The simple answer is that your inheritance will always be your sole and separate property so long as you've maintained it separately. In other words, don’t commingle it and don’t retitle it in joint name. Unfortunately, separate property has a way of becoming marital property if it’s not properly handled and I can give you an example. If a couple buys a new house and a spouse uses previously inherited assets for the down payment and then they title the house in a deed in joint name, well that house has now become considered marital property and it could be subject to 50-50 division in the event of the divorce and the same holds true for any investments purchase with separate assets that later become title in both the husband-and-wife's joint name for those important to keep the inherited property in a separate name.

HILLARY HOWARD: Is there any way a prenup could help somebody with inheritances?

NINA MITCHELL: Well, prenup can, yes and a prenup really allows you and your future spouse to agree before you get married who owns what and each person’s property rights upon divorce and death. So naturally, no one goes into a marriage wishing for a divorce, but this is very much like an added asset protection just in case things go wrong. Prenups can save time and money and preserve the inheritance, but they have to be entered into voluntarily with each party and you also have to have full and fair financial disclosure. I can give you several benefits of a prenup very simply by agreeing to keep your property separate and non-marital, you won’t have to prove in court what was or wasn’t your property before the marriage and a prenup can also help limit your responsibility for your future spouse’s death by agreeing in advance that certain debts will be satisfied by the separate assets and not through marital assets.

SHAWN ANDERSON: A lot of important info there. Thanks so much Nina.

NINA MITCHELL: You're welcome.

SHAWN ANDERSON: Nina Mitchell with Bridgewater Wealth in Bethesda, for more go to WTOP.com, search Her Wealth.


Shawn: Now you hear all kinds of deals about leasing cars, how can you negotiate a better deal if you want to lease?

Nina: Okay, well many people don't realize that they can actually negotiate the sticker price on a leased car in the same way that you would do that if you're buying a car. And since when you lease -- when you're, you know, your lease payments basically cover the depreciation, the difference between the sales price and the residual value. So it's definitely in your best interest to try to reduce that sales price as much as possible because then you'll pay you know, smaller dollars over the life of the lease. Make sure you pay attention to the down payment at the lease signing. And so here's an example, you might see an ad that says you know, lease payment is only 1.99 a month and that sounds like a great deal for thirty six months. The catch is, is that it might require a $3,600 down payment. So, if you amortize the down payment, then actually that 1.99 special, becomes 2.99. So, you really have to kind of look at total costs. 

And then lastly, dealerships use the term, money or lease factor, when they're calculating your financing costs and a lease factor is not the same as an interest rate. So, you have to make sure the dealer converts that lease factor into a comparable interest rate so you know what your financing charges are. 

Shawn: At the end of the day, does one method wind up being more expensive more often than the other, or can we tell that?

Nina: You know what, it really depends on how long, if you're going to hold the car for a long time, you're better off buying. But if you know, and if you're not, if you just really enjoy driving and you want to have a new car, then go ahead and lease. I mean, there's pros and cons to both, to be honest with you, it's not one size fits all.

Shawn: Alright Nina, great. Happy Thanksgiving to you. Alright, Nina Mitchell is with The Colony Group, for more go to wtop.com and search Her Wealth.

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Nina Mitchell, Principal, Senior Wealth Advisor & Co-President, Colony Sports & Entertainment

With over 25 years of finance, tax and investment advisory experience, Nina advises an elite group of professional athletes, executives and high net worth individuals. She is a driving force behind Her Wealth, Colony's initiative to empower women with financial knowledge, resources and confidence.