Protecting Your Estate from Your Adult Child’s Divorce

Part of the “American dream” is to work hard, save your money, and have enough leftover when you die so that you can leave your children some type of inheritance. These assets can be in the form of money, stocks, bonds, real estate, and more. But the one thing parents do not want to happen is to leave their children an inheritance only to have it become part of a divorce settlement.

It is no secret that almost half of the marriages in this country end in divorce. The rate is even higher for second and subsequent marriages. When a couple divorces, any assets they have are usually part of the marital estate and it is all divided between the couple. How that division is done depends on the laws of the state they live in.

Some states are community property states, which mean that everything is split in half. Other states are have equitable division laws, meaning that the marital estate is divided equitably, but not necessarily equally.

When one spouse has inherited assets, it is not uncommon for those funds to become “commingled” with the marital assets. After all, many couples have joint bank accounts so it would be only natural for the spouse who inherits the money to deposit those funds into the couple’s joint bank account. When this happens, the inheritance now becomes part of the marital estate and both spouses have legal right to ownership.

If you are concerned that the assets you plan on leaving for your adult child could end up with your future ex-in-law, there are steps you can take to ensure that only your child and grandchildren benefit from your estate.

Protecting Your Estate

If you are concerned that your son or daughter is in an unstable marriage and you suspect they will eventually divorce their spouse, you can discuss with your estate planning attorney what would be the best option for ensuring the assets you leave your child does not become part of a divorce settlement.

One of the best ways to do avoid this from occurring is by creating a living trust. You can place all the assets you are leaving to your child and still have control over those assets. Your child is named beneficiary, but instead of ownership of the assets transferring to your child upon your death, you can set the trust up so that there is an independent trustee who controls the trust. This way, the trust will never become part of your child’s marital estate and become at risk if there is a divorce.   

You can also choose to name your grandchildren as beneficiary instead of your child if you feel that there is a chance that if you leave your assets to your child, they will be spent foolishly and will not benefit your grandchildren.

No matter what the family dynamics are that you may be dealing with, a lawyer can help set up an estate plan which will ensure that your loved ones are well protected when you are gone.