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How a child support judgment may affect an inheritance

In some cases, estate planning for Colorado residents may not be as straightforward as deciding to whom assets will be left. It may be necessary to consider whether beneficiaries have creditor issues that will affect their ability to inherit property.

For example, in one case, a woman left her house to her three sons. However, one of the sons had a child support judgment against him. Besides taxes, a child support lien is the top priority among creditor claims. An executor has to search for child support judgments before distributing assets, and as much of the amount owed as possible must be paid. Executors are also allowed to exercise discretion in paying property in kind. They may sell the home.

Another choice would be for two of the sons to loan the third one the money to pay the support. They could then take that son's share of the home represented by that loan. However, this depends upon the other beneficiaries having the cash to do this. Therefore, when a person is making an estate plan, it is important to look into what kinds of debts beneficiaries might carry and how that might affect their ability to get an inheritance.

One possibility a person might discuss with an attorney is how a trust might be set up to protect assets from creditors. Trusts may also be set up for a number of other reasons including to protect assets from an irresponsible beneficiary. Trusts can be set up to only distribute assets at certain times or at a trustee's discretion. People may also want to discuss the estate plan with their beneficiaries. This can help to ensure that their intentions are understood.

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Samuel J. Owen, P.C.
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Golden, CO 80401

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CBA | Colorado Bar Association | Established in 1897 Denver Bar Association | Since 1891 Nebraska | State Bar Association Naela | National Academy of Elder Law Attorneys, Inc.