You may love your children dearly — but that love may not extend to all of their spouses. In fact, you may not even really trust all of those spouses to be around for the long haul.
That can present some problems when you go to put together your estate plan. How do you make sure that all of your children inherit what you want them to have, while still protecting them from the avarice of a spouse during a divorce? Is it even possible?
Absolutely. Estate planning is all about finding solutions to problems like these. In the case of an adult child whose marriage may not be solid, a trust can often come to the rescue. Done right, it can help keep family money firmly in the family — even if your child’s marriage falls apart.
In general, inheritances are considered separate property — meaning that an inheritance doesn’t automatically get put into the family pot when a divorce happens and it is time to divide the assets. However, it’s important that you discuss the possibility of a divorce with your children (even if you bring it up as a remote possibility rather than saying you believe it is inevitable). Your children need to understand that the intention is to keep the bulk of the money from being co-mingled with other household funds. If that happens, it loses its privileged status.
That way, your children understand that the money in the trust is being willed only to them — not their spouses. The trust will have their names on it, not their spouses. They may eventually choose to co-mingle any money that’s disbursed with marital funds, but the bulk of the money you leave behind can remain protected.
In order to have a trust properly formed and protected from an adult child’s divorce, make sure that you tell your attorney what your concerns are and what you are aiming to do.