Let’s face it, we’ve all heard startling statistics about the divorce rates, so what we can you do to make sure that your child’s inheritance is protected in the event of a future divorce?
You might have heard that inherited assets are “separate property” that is not subject to a divorce—and while that’s true on the surface—it becomes a slippery slope very quickly. You see once your child inherits the money, it also depends on what your child does with that money going forward.
Often, over time, the child intermingles the money with marital assets. The child uses some of the money to pay the mortgage, do some home improvements or pay for a family vacation. Next thing you know, when their spouse is filing for divorce, the soon-to-be-ex is now claiming that the inherited funds have now been converted to marital funds because the accounts were used for marital purposes.
It doesn’t have to be that way. You can structure your estate plan so that the funds are held for your children’s use and benefit, but they continue to be separate and therefore protected in the event that your child ever goes through a divorce (or gets sued, becomes disabled, etc.).
If you’ve gone through all of the hard work to set aside the funds to take care of your children and set up an estate plan—make sure that the plan also continues to protect your children going forward.
Free Guide for Parents with Minor Children:
If you have minor children, make sure you check out our free guide, on Children's Safeguard Planning, that covers the unique issues involved in estate planning when you have minor children, including naming guardians and protecting their future. Or, contact us to discuss the best way to get started at 919-443-3035 or via our contact form.