You will need to plan to specifically keep your money from the ex-spouse of your child.
Your child has been divorced.
They have been through legal proceedings.
They have been through heartache.
The last thing you want is to divide the inheritance of your own child with their ex.
What can you do?
According to a recent Kiplinger article titled “A Trust Can Protect Your Adult Child’s Assets from a Failed Marriage, a trust or revocable living trust may be your best option to keep the inheritance out of the divorce settlement.
If the child inherits before the divorce is finalized, the inheritance could be included in their marital property in certain states.
What does this mean?
It would be divided in the divorce.
You do not want this.
Here is where the trust comes in.
A trust can hold the money and protect it from a divorce.
It could be a previous divorce or a future divorce.
The trust serves the same purpose.
Divorce is not the only reason to use a trust.
If your child is not yet 18, a trust can provide financial guidelines.
This will protect the money for their needs until they are mature enough to manage it themselves.
Should you create a trust immediately when your child marries?
After seeing their relationship with their spouse over time, you will have a better idea whether a trust may be useful.
Trusts sound useful, yes.
Why would I not get one?
Well, they are more expensive initially to set up and are more complex estate planning tools.
If they do not fit your estate planning goals or needs, you should not spend this extra money.
How do you know if a trust fits your circumstances?
Work with an experienced estate planning attorney.
He or she can help you reach your goals.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Kiplinger (March 2017) “A Trust Can Protect Your Adult Child’s Assets from a Failed Marriage”